FAB reports a Group Net Profit of AED 8.0 Billion for the first half of 2022, up 50% year-on-year

Published July 28th, 2022 - 07:04 GMT
FAB reports a Group Net Profit of AED 8.0 Billion for the first half of 2022, up 50% year-on-year
Hana AlRostamani, Group Chief Executive Officer of FAB.
Highlights
Second quarter net profit at AED 2.9 Billion

“FAB delivered a strong performance in the first six months of 2022 with a 50% increase in net profit compared to the same period in 2021. Despite heightened global market volatility, our core businesses maintained solid growth momentum reflecting healthy pipeline execution across our diversified franchise, and our ongoing strategic focus on deepening client relationships.”  -Hana Al Rostamani, Group Chief Executive Officer.

 

Strong underlying performance supported by higher revenue and moderate cost of risk, amid ongoing investments to support growth aspirations

H1’22 highlights:

  • Group Net Profit at AED 8.0 Billion, up 50% yoy; annualised Earnings per Share at AED 1.43  
  • Total Income at AED 12.5 Billion, up 31% yoy, includes AED 3.1 Billion net gain on sale of majority stake in Magnati
  • Impairment charges (net) at AED 1.0 Billion, 9% lower yoy; annualised cost of risk at 47 basis points
  • Operating costs at AED 3.1 Billion, up 8% yoy excluding Bank Audi Egypt inclusion, reflects ongoing investments to drive growth and transformation  

Q2’22 highlights:

  • Group Net Profit at AED 2.9 Billion, up 13% qoq on an underlying basis when excluding gains on Magnati stake sale 
  • Operating income at AED 5.0 Billion, 4% lower yoy, up 12% qoq driven by higher interest and non-interest income
  • Impairment charges (net) at AED 582 Million, 14% lower yoy, up 27% qoq
  • Operating costs at AED 1.6 Billion

Double-digit loan growth reflects sustained business momentum, while liquidity, asset quality and capital position remain strong

  • Loans, advances and Islamic financing at AED 459 Billion, up 6% sequentially and 12% ytd
  • Customer deposits at AED 648 Billion, up 8% sequentially and 5% ytd; CASA balances at AED 291 Billion, are up 15% yoy
  • Liquidity Coverage Ratio (LCR) at 135% underlines strong liquidity position 
  • Healthy asset quality metrics with NPL ratio and provision coverage at 3.6% and 100%, respectively
  • Common Equity Tier 1 (CET1) at 12.6%, comfortably above regulatory requirements

We continued to deliver on our growth objectives and create value for all stakeholders while navigating a rapidly evolving environment 

“FAB delivered a strong performance in the first six months of 2022 with a 50% increase in net profit compared to the same period in 2021. Despite heightened global market volatility, our core businesses maintained solid growth momentum reflecting healthy pipeline execution across our diversified franchise, and our ongoing strategic focus on deepening client relationships. 

Almost AED 50 Billion net incremental lending was extended by FAB       year-to-date, which is a record for the Group for any half-year period. This demonstrates buoyant regional activity, FAB’s leading origination capabilities, and the fundamental strength of our balance sheet as we continued to deploy our resources and expertise to support our client franchise with their local and cross-border banking needs.

During the period, we continued to focus on unlocking opportunities for our clients and communities through specialised offerings and innovative solutions, and by strengthening our footprint in target markets. We are also proud of our leading role in building a sustainable future for all, and the tangible progress we are making against our ESG ambitions. Looking ahead, we must recognise a more challenging global economic outlook marked by turbulent market conditions and inflationary pressures. As we enter the second half of the year, we remain committed to our clients and stakeholders, and confident in our ability to deliver sustainable shareholder returns as we pursue our growth and transformation plans.” -Hana AlRostamani, Group Chief Executive Officer.

“FAB produced another solid set of results in the second quarter with a net profit of AED 2.9 Billion, up 13% sequentially on an underlying basis, bringing first half 2022 profit to AED 8.0 Billion. Annualised return on tangible equity for the first half of 2022 improved to 19.5% from 13.6% in H1’21.

In the last quarter, all our core businesses delivered top line growth sequentially, led by a double-digit growth in Investment Banking and Corporate and Commercial Banking, which is a strong result in the context of adverse global market conditions.

This was helped by strong volumes, early benefits from rising interest rates, and healthy client activity in Global Markets consistent with our strategy to enhance cross-sell. Risk was prudently managed across the Group, while the year-on-year growth in operating expenses reflects continued investments in franchise growth and transformation.

We have maintained a strong liquidity position, with Group LCR at 135%, and our balance sheet is optimally positioned to continue to benefit from rising interest rates. Despite balance sheet growth and market and regulatory headwinds, capital buffers remain strong with June-end Group CET1 at 12.6%. Although the supportive regional economic backdrop and the diligent execution of our strategy represent significant tailwinds, we remain cautious in the context of heightened market volatility, persistently elevated global inflation and rapidly evolving monetary policy.” - James Burdet, Group Chief Financial Officer.

ECONOMIC OVERVIEW AND OUTLOOK

Global economic conditions weakened during Q2’22 with inflationary pressures driving aggressive monetary policy tightening, and multiple headwinds fuelling stagflation concerns and market volatility. 

In contrast, the UAE economy continued to demonstrate resilience buoyed by strength in oil prices, moderate inflation, a recovery across key economic sectors including real estate and tourism, and ongoing structural reforms to drive economic growth and diversification. The underlying strength of the UAE economy was also highlighted by PMI data, which remained in expansionary territory for the 19th consecutive month. Despite ongoing global uncertainty, we maintain a positive outlook for UAE economic growth this year and beyond. We now expect real Gross Domestic Product (GDP) growth to reach 5.7% in 2022 and 4.4% in 2023 (from previous forecasts of 4.8% and 4.0%, respectively) with oil price averaging USD 108 /bbl and inflation at around 5%.

Q2/ H1’22 SUMMARY FINANCIALS

Income statement - summary (AED Mn)

 

Q2'22

 

Q1'22

QoQ %

 

Q2'21

YoY %

 

H1'22

H1’21

YoY %

Net interest income

 

3,390 

 

3,135 

 

2,802 

21 

 

6,525 

5,482 

19 

Non-interest income

 

1,587 

 

1,323 

20 

 

2,390 

(34)

 

2,910 

4,093 

(29)

Operating income

 

4,977 

 

4,458 

12 

 

5,193 

(4)

 

9,435 

9,575 

(1)

Gain on Magnati stake sale

(incl fair valuation of retained interest)

 

288

 

2,805 

(90)

 

-   

na

 

3,094 

-   

na

Total Income

 

5,265 

 

7,264 

(28)

 

5,193 

 

12,529 

9,575 

31 

Operating expenses

 

(1,603)

 

(1,521)

 

(1,451)

10 

 

(3,124)

(2,770)

13 

Operating profit

 

3,662 

 

5,742 

(36)

 

3,742 

(2)

 

9,405 

6,805 

38 

Impairment charges, net

 

(582)

 

(457)

27 

 

(677)

(14)

 

(1,039)

(1,147)

(9)

Non-controlling interests and taxes

 

(175)

 

(165)

 

(186)

(6)

 

(339)

(304)

12 

Net Profit

 

2,906 

 

5,120 

(43)

 

2,878 

 

8,026 

5,354 

50 

Basic Earnings per Share (AED)

 

1.03

 

1.84

(44)

 

1.01 

 

1.43 

0.95 

52 

                         

Balance sheet - summary (AED Bn)

 

Jun'22

 

Mar'22

QoQ %

 

Jun'21

YoY%

 

Dec’21

Ytd%

 

Loans, advances & Islamic financing

 

459 

 

433 

 

398 

15 

 

410

12 

 

Investments

 

186 

 

191 

(3)

 

177 

 

191

(3)

 

Customer deposits

 

648 

 

600 

 

575 

13 

 

615

 

CASA (deposits)

 

291 

 

310 

(6)

 

252 

15

 

288

1

 

Total assets

 

1,042 

 

982 

 

944 

10 

 

1001

 

Equity (incl Tier 1 capital notes)

 

111 

 

111 

 

106 

 

113

(1)

 

Tangible equity

 

80 

 

80 

1

 

74 

 

82

(2)

 
                         

Key Ratios (%)

 

Q2'22

 

Q1'22

QoQ
(bps)

 

Q2'21

YoY
(bps)

 

H1'22

H1'21

YoY
(bps)

Net interest margin (NIM)

 

1.57

 

1.54

3

 

1.51

6

 

1.55

1.49

6

Cost-income ratio (ex-integration costs)

 

31.5

 

33.3

(182)

 

27.3

423

 

32.4

28.4

399 

Cost of risk (bps)

(loans, advances & Islamic financing)

 

52

 

42

10 

 

63

(11)

 

47

56

(9)

Non-performing loans ratio

 

3.6

 

3.8

(24)

 

3.9

(40)

 

3.6

3.9

(40)

Provision coverage

 

100

 

102

(217) 

 

101

(103) 

 

100

101

(103) 

Liquidity coverage ratio (LCR)

 

135

 

120

lge

 

119

lge

 

135

119

lge

Return on tangible equity (RoTE)

 

14.1

 

25.3

lge

 

15.3

(115)

 

19.5

13.6

589 

Return on risk-weighted assets (RoRWA)

 

2.0

 

3.6

(159)

 

2.2

(22)

 

2.8

2.0

71 

CET1 ratio 

 

12.6

 

13.0

(35)

 

13.0

(39)

 

12.6

13.0

(39)

Capital adequacy ratio

 

15.6

 

15.9

(39)

 

16.1

(58)

 

15.6

16.1

(58)


Notes:

  • Cost-income ratio for H1’22 and the quarters in 2022 excludes Magnati-related gains booked during 2022
  • Comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in the consolidated financial statements
  • Ratios for the quarter are annualised, where applicable
  • For further details on calculation of the ratios, please see the Quarterly Series on FAB IR website's financial reports page
  • To view key figures in USD, please refer to: bankfab.com > investor relations > reports & presentations > key quarterly figures
  • These results include financials of Bank Audi Egypt (BAE) effective post legal day 1 on 28 April 2021. As a result of the purchase price allocation (PPA) exercise, the 2021 comparative information has been restated to reflect the adjustments to the assumed carrying amounts. Refer to note #32 in the financials for the period ended 30 June 2022.
  • Rounding differences may appear in above table

Background Information

First Abu Dhabi Bank

FAB, the UAE’s largest bank and one of the world’s largest and safest institutions, offers an extensive range of tailor-made solutions, and products and services, to provide a customised experience. Through its strategic offerings, it looks to meet the banking needs of customers across the world via its market-leading Corporate and Investment Banking and Personal Banking franchises.

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