First Abu Dhabi Bank, the largest bank in the United Arab Emirates in terms of market capitalisation, announced on Monday a 16 percent rise in third quarter (Q3) net profit for 2018.

The group’s net profit for Q3 was 3.02 billion dirhams ($822.22 million), versus 2.61 billion dirhams in the same period last year. Group net interest income was 3.26 billion dirhams, versus 3.24 billion dirhams a year ago.

The statement noted that net interest income was “broadly stable this year” and net interest margin (NIM) was lower year-on-year at 2.41 percent, “primarily reflecting the dilutive impact of short-term liquidity placements with central banks”.

The 16 percent rise in third quarter net profits beat analyst estimates. SICO Bank had forecasted a 5 percent increase.

“The beat to our estimate was on the back of strong non-interest income and lower operating expense,” Chiro Ghosh, research manager at investment bank SICO, told Zawya.

“We see this as a strong result and expect the market to react positively over the medium-term. NIM compression is perhaps the only negative in the result, however note most UAE banks are struggling with rise in funding cost,” Ghosh added.

FAB, one of the world’s largest financial institutions, was created last year following a merger between First Gulf Bank and National Bank of Abu Dhabi. (Read more here).

So far this year, FAB’s stock price has gained 42.24 percent. The banking sector has been the biggest boost for the Abu Dhabi stock market in 2018, as an index of banking stocks on the exchange has increased in value by 26.79 percent so far this year, outperforming the main market index, which has gained 12.68 percent from January to date.

According to data from Eikon, two analysts have a ‘strong buy” rating on the stock, four analysts have a ‘buy’ rating, while three analysts recommended a ‘hold’ rating.

The bank also said in its statement to the exchange that it would launch commercial operations in Saudi Arabia by the end of the year: “In Saudi Arabia, we have completed our first debt capital markets transaction though our Investment Banking franchise and we will be launching our commercial banking  activities during the current quarter,” it said. (Read more here)

FAB's share price gained 0.55 percent on Tuesday, helping Abu Dhabi's market index close 0.28 percent higher.

Elsewhere in the region, Dubai's index gained 0.21 percent, Bahrain's index dropped 0.11 percent, Kuwait's index increased by 0.46 percent while Qatar's index edged down 0.1 percent and Oman's index edged up 0.1 percent.

By 15:07 GST, Saudi Arabia's index was trading 0.50 percent higher and Egypt's index was 0.23 percent lower.

(Reporting by Gerard Aoun; Editing by Michael Fahy)


Gain a deeper understanding of financial markets through Thomson Reuters Eikon.

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2018