First Abu Dhabi Bank (FAB) announced record 2022 annual profits on Thursday, growing 7% year over year to AED 13.4B. According to a statement from the largest UAE lender, FAB, its “historic-high profit” was fueled by sound risk management, cost control, and good underpinning business performance in a rising rate environment.
Because of judicious provisioning and conservative asset assessments, the bank’s fourth-quarter net profit fell to AED 2.5B from AED 2.9B in the third quarter of 22. There was AED 1.18 in earnings per share. For the upcoming fiscal year (FY22), the bank’s board of directors has recommended cash dividends per share of 52 fils as opposed to the 49 fils cash dividends paid out the year before, according to Khaleej Times. According to FAB, “Double-digit balance sheet expansion shows strong business momentum; Group foundation is solid across all key parameters.” The gain on the sale of a majority stake in Magnati and a 23% increase in net interest income drove the overall income growth to a 10% increase to AED 23.9B, according to FAB. MENA also contributed more to the geographic diversification of revenue than before.
Impairment charges (net) rose 7.0% to AED 2.8B, reflecting prudent provisioning with AED 1.1B charge taken in Q4’22. Operating costs rose 15% to AED 6.7B “driven by the integration of operations in Egypt (FABMisr), write-off of legacy systems in Q4’22 as part of our ongoing technology transformation strategy, as well as continued investments into the business,” FAB said. Customer deposits rose 14% to AED 701B and despite rising interest rates, CASA balances grew 3.0% YoY. Loans, advances and Islamic financing surged 12% to AED 460B, outperforming the industry average of 5.5%, the bank said.
His Highness Sheikh Tahnoun bin Zayed Al Nahyan, Chairman of FAB, said 2022 was a year of continued strategic diversification and expansion for the UAE and regional economies, which posted their fastest economic growth in a decade. “By capitalising on the favourable macroeconomic conditions, FAB has been laying foundations for the future.”
“I remain confident that FAB will continue to play an integral role in furthering economic prosperity and sustainability efforts,” he added. FAB’s group chief executive officer, Hana Al Rostamani, stated that the bank’s profit growth of 7.0% on an annual basis to AED 13.4B is a record high. With accomplishments in accordance with the bank’s medium-term strategy, FAB achieved another record performance in 2022, displaying robust growth and showcasing the strength of its key businesses. The fundamental strength of our balance sheet, supported by a strong liquidity profile and effective capital management, allowed us to drive improvements in Common Equity Tier 1 (CET1) despite market and regulatory headwinds. Strong business volumes have underlined healthy pipeline execution across our diversified business model.
The bank said it anticipates a relatively benign inflation outlook in 2023 compared to many parts of the world, which should provide welcome stability against the macroeconomic backdrop. “However, the region will not be immune to global price pressures and economic slowdown. Hence, we forecast a more modest real GDP growth rate of around 5.0% for UAE in FY’23, although that growth should be more sustainable as economic diversification continues to evolve.”
