At Dh12.5 billion in profits, First Abu Dhabi Bank pulled off a strong showing in what is quite a difficult operating environment. Image Credit: Gulf News Archive

First Abu Dhabi Bank (FAB) reported on Tuesday an increase in its net profit for 2019 by nearly 4 per cent as it benefited from gains on investments and derivatives.

The bank recorded Dh12.5 billion in profit for the year, up from the Dh12 billion recorded in 2018. This put profits in the fourth quarter of 2019 alone at Dh3.08 billion, up 5 per cent from the Dh2.9 billion in the same quarter of 2018.

FAB’s board of directors recommended a dividend of Dh0.74 per share, amounting to a total pay-out of Dh8 billion. The dividends are on par with those for 2018 when FAB also recommended a distribution of Dh0.74 per share.

Strong set of numbers

In a statement, the bank said 2019 was “another year of growth” despite “challenging market conditions regionally and internationally.”

“These results were driven by solid underlying performance of our core businesses, despite challenging operating conditions, including a reversal of the interest rate cycle in the second half of the year,” said Abdulhamid Saeed, chief executive officer of FAB Group.

The US Federal Reserve – and with it, the UAE Central Bank – started lowering interest rate in the second half of 2019, after being on a hiking path since December 2015 that pushed interest rates higher. Banks in the UAE had been benefiting for over three years from higher interest rates, which helped grow their net interest income.

On Tuesday, FAB’s financial statement showed a 2 per cent decline in net interest income, which fell to Dh12.7 billion. Fee and commission income also fell in 2019 by 6.5 per cent to Dh3.17 billion.

Despite that, the bank benefited from higher foreign exchange gains (up 27 per cent year-on-year), as well as higher gains of investments and derivatives, which climbed by 82 per cent last year to reach Dh1.5 billion compared to Dh826 million in 2018.

Expanding markets

Looking ahead, FAB said it plans to continue expanding in its target markets as it enters into exclusive discussions with Lebanon’s Bank Audi to acquire its fully-owned unit in Egypt.

The bank said that it sees a global backdrop impacted by persistent market uncertainties, and cited continued softness in the UAE property market as another highlight of macroeconomic condition. FAB said it therefore plans to maintain its cost and risk discipline, and strengthen its position in the UAE by growing market share in chosen segments and boosting client relationships.

FAB said it is “prudently positioned to navigate challenges ahead,” and that it is making “significant progress against our strategic priorities both in the UAE and key strategic markets.”

In terms of its balance sheet, loans and advances by FAB rose by 16 per cent year-on-year to reach Dh408 billion at the end of 2019, while customer deposits rose 12 per cent to Dh519 billion.