First Abu Dhabi Bank reports Dh8.4b net profit as H1 revenue rises 16%

First Abu Dhabi Bank Records Dh8.4 Billion Net Profit as H1 Revenue Surges 16%

Consistent Growth Trajectory

First Abu Dhabi Bank (FAB), the UAE’s largest lender, has announced a net profit of Dh8.4 billion for the first half of 2024, alongside a 16% surge in revenue to Dh15.7 billion. This remarkable performance underscores the bank’s consistent growth trajectory and robust financial health, cementing its status as a leading financial institution in the region.

Q2 Financial Performance

In a statement, FAB revealed that its profit before tax grew 15% year-on-year to Dh10 billion. The net profit for the second quarter was Dh4.3 billion, with operating income rising 14% year-on-year to Dh7.8 billion. These strong results were driven by double-digit growth across both interest and non-interest income sources.

Revenue Mix and Business Momentum

The bank’s strong business momentum, expansion in Net Interest Margin (NIM), and an improved revenue mix contributed significantly to its performance. Non-Funded Income (NFI) accounted for 38% of the group’s revenue, up from 35% in the first half of 2023. This shift highlights the bank’s strategic focus on diversifying its income sources and enhancing its financial stability.

Asset Growth and Market Position

With total assets reaching Dh1.2 trillion as of June-end 2024, FAB reinforced its position as the largest bank in the UAE. Loans, advances, and Islamic financing grew by 6.0% to Dh513 billion, reflecting healthy demand and market share gains across key segments and geographies. This growth is indicative of FAB’s ability to meet the evolving needs of its clients and maintain its competitive edge in the market.

Sustainable Finance Initiatives

The bank facilitated an additional Dh52 billion in sustainable finance in the second quarter of 2024, reaching a total of Dh200 billion, or 41% of FAB’s 2030 target. This initiative is part of FAB’s broader commitment to sustainability and responsible banking. By prioritizing sustainable finance, FAB is not only supporting global environmental goals but also aligning itself with the growing demand for ethical investment options.

Leadership Insights

Hana Al Rostamani, Group Chief Executive Officer of FAB, highlighted the bank’s reaffirmation as a leading force in the Mena banking sector. She noted that the group delivered another strong set of results in the second quarter and the first half of 2024. Al Rostamani emphasized the bank’s strategic focus on leveraging its international network to capitalize on market opportunities and drive growth.

Strategic Expansion and Resilience

“FAB continues to leverage its international network to capitalize on market opportunities across the globe. The bank is actively building and expanding business corridors in close alignment with national ambitions, reinforcing our international franchise as a foundation for growth and resilience,” Al Rostamani said. This approach enables FAB to navigate the complexities of global markets while maintaining a strong presence in key regions.

Financial Efficiency and Strategic Investments

Lars Kramer, Group Chief Financial Officer of FAB, emphasized the bank’s high returns and diversified growth across its franchise. He highlighted the consistent growth in both interest and non-interest income sources, reflecting efforts to enhance cross-selling and deepen client relationships. Kramer noted that these strategies are central to FAB’s success in achieving sustainable financial performance.

Lending Momentum and Interest Margins

Kramer noted that lending momentum was healthy year-to-date, with incremental improvements in net interest margins for the fourth consecutive quarter. This reflects dynamic balance sheet management and optimal positioning ahead of shifts in interest rates. FAB’s proactive approach to interest rate management has enabled it to maximize profitability while maintaining a stable financial outlook.

Return on Tangible Equity

In the first half of 2024, FAB delivered a Return on Tangible Equity (RoTE) of 17.3%, including 18.1% in the second quarter. This demonstrates the group’s laser focus on shareholder value. By delivering strong returns, FAB is not only meeting the expectations of its investors but also reinforcing its reputation as a financially robust institution.

Strong Balance Sheet Fundamentals

Balance sheet fundamentals remained strong, with solid asset quality metrics, a non-performing loans (NPL) ratio of 3.7%, and a liquidity coverage ratio of 152%. The group’s cost-to-income ratio of 24.4% as of June-end 2024 demonstrated superior operating efficiency. These metrics highlight FAB’s prudent risk management practices and its ability to maintain financial stability in various market conditions.

Business Line Performance

FAB reported strong performance across all business lines in the first half of 2024. Investment banking and global markets saw significant increases in operating income of 23% and 26% year-on-year, respectively. Consumer banking operating income advanced by 16% year-on-year. These results underscore the bank’s comprehensive growth strategy, which spans multiple business segments and leverages its diverse portfolio.

Long-Term Value and Innovation

“During the first half of 2024, we continued to unlock long-term value through sustainable growth and diversification, strategic partnerships, and enhanced customer experience and service delivery through innovation and future technologies,” the bank stated. FAB’s commitment to innovation ensures that it remains at the forefront of the banking industry, offering cutting-edge solutions to its clients.

Future Outlook and Strategic Positioning

“Our outlook remains anchored in the strong fundamentals of the UAE and Abu Dhabi as a global economic powerhouse and preferred hub for investment, talent, and innovation. We remain on track to meet our 2024 and medium-term guidance and to deliver sustainable shareholder returns,” FAB added. The bank’s strategic positioning and forward-looking approach ensure that it is well-equipped to navigate future challenges and capitalize on emerging opportunities.

Capital Base and Risk Profile

“With our leading liquidity position and high-quality risk profile, we are upholding very strong fundamentals, including a rock-solid capital base, which consolidated further following our Tier 2 bond issuance earlier this month,” the statement concluded. This solid capital base provides a strong foundation for continued growth and resilience, supporting FAB’s long-term strategic objectives.