First Abu Dhabi Bank (FAB) reported late on Monday a rise in net profit for the first quarter (Q1) of the year 2019, but the bank’s stock drifted lower.

The largest bank in the United Arab Emirates’ Q1 2019 net profit attributable to shareholders amounted to 3.11 billion UAE dirhams ($846.68 million), compared to 3 billion dirhams in Q1 2018, a 3.67 percent increase.

Monsef Morsy, co-head of research at Cairo’s CI Capital, told Zawya by email that FAB’s results were in line with CI Capital’s estimate for the quarter.

“Net income was mainly driven by surging non-interest income, which grew by 18 percent q-o-q (quarter on quarter) during Q1 2019, primarily underpinned by FX gains coming on the back of FAB’s ECB (European Central Bank) placements,” Morsy added.

FAB places a large portion of its deposits with central banks like the U.S. Federal Reserve and the ECB, Moody’s Investors Service said in its latest credit opinion on FAB. “This reflects FAB's treatment of these deposits as operational accounts that could be withdrawn on short notice,” it added.

Q1 2019 net interest income retreated by 5.18 percent year-on-year, customer accounts and other deposits fell by 6.97 percent.

FAB’s shares dropped 2.44 percent on Tuesday to 16 dirhams and have added 14.89 percent so far since the start of the year 2019.

Abdulhamid Saeed, group chief executive officer at FAB said in the bank’s management and analysis report released on Monday: “Our performance during the first three months of 2019 has created a robust foundation for sustained growth momentum and we remain optimistic about the remainder of the year.”

Saeed also said: “Increasing our foreign ownership limit to 40 percent, which was approved by shareholders in February and implemented this month, was a notable milestone supporting higher liquidity on our shares and attracting further international investment.”

On February 26, FAB said in a statement to the Abu Dhabi Securities Exchange that its shareholders had approved a proposal to raise to the bank’s foreign ownership limit. (Read more here).

(Reporting by Gerard Aoun; Editing by Michael Fahy)


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