First Abu Dhabi Bank, the UAE’s largest lender by assets, reported a 54 percent jump in third-quarter profit on the back of higher net interest income and gains on investments as the Arab world’s second-largest economy continues to recover from the Covid-19 pandemic.
Total net profit attributable to shareholders for the three-month period to the end of September, climbed to Dh3.9 billion ($1.06bn), the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded. The total profit beat analyst estimates of Dh2.55bn, according to analysts polled by Bloomberg and a projected Dh2.6bn forecast from analysts on Eikon Refinitiv data.
Net interest income during the period rose 10 percent to Dh3.14bn, while the gain on investment and derivatives surged to Dh2.01bn from Dh391.4 million in the same period last year.
“Our robust pipeline translated to increased business activity and deal execution,” Hana Al Rostamani, group chief executive of FAB, said.
“Areas of strategic focus are progressing well, as we continue to build specialized capabilities within our core businesses to support future growth while accelerating transformation. New product propositions are being rolled out in key areas, capitalizing on partnerships and technology to deliver superior solutions and service.
“We also continue to make progress against our international strategy. The integration of our operations in Egypt is on track to be completed during 2022 and we have recently received regulatory approval to establish our first branch in Shanghai, which will further expand our strategic footprint in Asia
“With the UAE at the forefront of the post-pandemic recovery and as we enter the final quarter of 2021, I am optimistic about the opportunities that lie ahead, not only for us as a bank, but also as an engine to the nation’s ambitious vision for the next 50 years and beyond.”
The UAE’s economy is expected to grow 3.1 percent in 2021, according to the International Monetary Fund. That is higher than the UAE Central Bank’s growth estimates of 2.1 percent this year and 4.2 percent in 2022. FAB expects the UAE’s economy to grow 2.4 percent in 2021 and 3.8 percent in 2022, driven by Expo 2020 and higher oil prices.
The economy has rebounded on the back of a rapid vaccine rollout and the easing of travel restrictions, with Dubai being one of the first cities globally to re-open its markets and businesses in July 2020, while ensuring strict compliance with health and safety measures.
The UAE also has one of the world’s highest per capita Covid-19 vaccination rates. Covid-19 cases in the country have dropped to below 100 and the Emirates is ranked third in the world in a league table looking at how well countries are controlling the coronavirus, while at the same time reopening their economies.
The UAE’s banking assets could grow 8 percent to 10 percent next year as the economy recovers from the pandemic, according to Abdulaziz Al Ghurair, chairman of the UAE Banks Federation.
Local lenders have benefitted from the Dh400bn monetary and fiscal support by the UAE government, including the central bank’s relief package of more than Dh250bn to local lenders to help soften the blow of the pandemic.
FAB’s total customer deposits in the third quarter grew 1 percent annually to Dh606bn, while loans and advances rose 4 percent to Dh404bn. Total assets increased 3 percent to Dh983bn.
The Abu Dhabi lender’s nine-month profit grew 26 percent to Dh9.2bn as the net gain on investment and derivatives jumped to Dh3.77bn from Dh611.2m reported during the same period last year.
FAB’s investment banking business was a major contributor to the “group’s earnings growth, on the back of an exceptional trading performance, and sustained activity” across debt capital markets, trade finance, advisory, and equity capital markets, James Burdett, group chief financial officer of FAB, said.
“We are also seeing positive underlying trends in our corporate and commercial, consumer, and private banking businesses, with corporate and consumer confidence strengthening during the period.”
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
