Dubai: The UAE's biggest bank FAB has had a good start to 2023 - but with first quarter 2023 net profit at Dh3.9 billion, the numbers come in higher than what the markets had been anticipating. That's 70 per cent higher on a year-on-year basis.
This was derived from Dh6.7 billion in income, which is up 51 per cent from a year ago. The gains come in a higher interest rate environment, with FAB reporting strong appetite among businesses and retail clients for its loans and other services.
What's remarkable about the latest results is that same time last year FAB had derived significant one-off gains from the majority stake sale in its payment processing entity Magnati. (If the Magnati gains are excluded, the year-on-year increase on net profit would be 70 per cent.)
"Amid turbulence in the global banking industry, the Group continues to operate on a sound balance-sheet foundation, including a solid capital position and a very strong liquidity profile," said Hana Al Rostamani, Group CEO. "In the first quarter alone, we attracted Dh80 billion in customer deposits, emphasising the depth of our relationships, and our superior credit ratings of AA- or equivalent as one of the safest banks worldwide."
In the first quarter alone, we attracted Dh80 billion in customer deposits, emphasising the depth of our relationships, and our superior credit ratings of AA- or equivalent as one of the safest banks worldwide.
The bank - which has been associated with talks of a possible takeover of UK's Standard Chartered - reported impairment charges of Dh798 million for the first three months, ‘implying an annual cost of risk of 62 bps’. The income for the period was also boosted by strong returns from its international operations. It's also a point that Hana emphasises - "The enhanced contribution from our international operations further demonstrates the strength of our diversified franchise and solid delivery against our growth strategy.
"The Group is uniquely positioned to navigate uncertain times, drive sustainable growth and shape the future of banking in the UAE and the broader region."
19 %
The contribution of international operations to FAB's Q1-23 profit after tax
A trillion-dirham asset size
FAB's adding more to its Dh1 trillion asset base, closing out Q1-23 with Dh1.2 trillion from a 21 per cent increase year-on-year. Loans and advances were at Dh473 billion, while customer deposits hit Dh781 billion. (And international customer deposits now make up 25 per cent of FAB's total.)
"We expanded our product offerings and grew our reach in strategic markets, while maintaining the highest standards of risk management, compliance and corporate governance," Hana said. "At the same time, we are investing in key areas to sustain our competitive advantage including talent and technology."
Abu Dhabi's biggest banks - FAB and ADCB - have thus delivered a solid set of financials, indicating that even with interest rate changes, there has been no real slackening in demand for loans. Dubai banks too are expected to mirror similar trends, with their Q1-23 performances offering strong buffers to headwinds for the global economy or its banking sector, which is still coming to terms with the Credit Suisse fallout.
We are realising our full potential as the driving force in the region’s economic growth, a global partner for investment and corporate clients, and the most trusted bank for consumers in our largest markets at home and abroad
