FAB reports Group net profit of AED 5.4bln for the first half of 2021

Second quarter net profit at AED 2.9 Billion, up 19% year-on-year

  
Hana Al Rostamani, Group Chief Executive Officer, First Abu Dhabi Bank (FAB).

Hana Al Rostamani, Group Chief Executive Officer, First Abu Dhabi Bank (FAB).

Abu Dhabi, UAE: First Abu Dhabi Bank (FAB), the UAE’s largest bank and one of the world’s largest and safest financial institutions, reported its financial results for the first half period ended 30 June 2021.

First half 2021 Group Net Profit was AED 5.4 Billion, a 11% increase year-on-year driven by revenue growth from a solid performance across our core businesses despite headwinds from rate cuts, increased contribution from our international operations following the recent acquisition in Egypt , and lower impairment charges. Cost discipline was maintained amid ongoing investments in strategic and digital initiatives with cost-to-income ratio (ex-integration costs) at an industry-leading level of 28.3%. Growth in lending and investments during the period demonstrate effective balance sheet deployment to enhance returns, while the Group’s foundation remains robust across liquidity, capital and asset quality.

HANA AL ROSTAMANI

Group Chief Executive Officer

“Our solid results in the first half of 2021, with Group net profit increasing 11% year-on-year to AED 5.4 Billion, are a testament to the successful execution of our strategic priorities, and our tenacious ability to drive our competitive position while capitalising on the opportunities presented by an improved backdrop.

Demonstrating the unique strength of our diversified franchise, we’ve achieved solid growth across our core businesses. In Corporate & Investment Banking (CIB), we continued to support and partner with our clients in navigating the gradual economic recovery and focused on driving specialisation in key areas, particularly investment banking, leading to a double-digit growth in revenue. Our client-centric strategy and leading role in several landmark deals across the region further cemented our position as the top-ranked regional bank across all MENA investment banking league tables, and the only bank ranked in the top 10 across all categories. At the same time, continued momentum in acquisition volumes, consumer spend surpassing pre-pandemic levels, and ongoing digitisation, helped sustain Personal Banking’s operating performance during the last quarter.

Our international franchise remains one of our key competitive differentiators, enabling us to offer enhanced connectivity to our clients, and to capture growing trade and investment flows. During the period, we have made excellent progress in our strategy to gain market share and increase penetration in targeted markets in our core region. Revenue from MENA grew 67% in the second quarter and 51% in the half year, led by Saudi Arabia and Egypt, and now represent almost half of revenues generated from our international operations.

As we remain firmly focused on creating superior and sustainable value for our shareholders, we continue to invest in our key enablers to power business growth. The acceleration of our digital transformation resulted in a significant enhancement of our digital servicing capabilities for our corporate and retail customers, driving further improvements in customer experience and higher Net Promoter Score (NPS). As an ESG leader, we are also determined to drive our sustainability agenda as we continue to embed ESG across the organisation.

Looking ahead and while uncertainties remain, we are confident that our distinct competitive strengths, proven agility, and innovative spirit, position us well to unlock opportunities for our clients, people, communities and all our stakeholders across the global markets we operate in.”    

James Burdett

Group Chief Financial Officer

The Group recorded a net profit of AED 2.9 Billion in the second quarter of 2021, up 16% sequentially and 19% year-on-year, bringing our first-half net profit to AED 5.4 Billion.

This strong result was driven by 18% revenue growth sequentially, led by a very strong performance in CIB from our investment banking businesses, sustained results in Personal Banking, and higher contribution from our international operations following Bank Audi Egypt acquisition. Impairment charges were lower year-on-year on the back of a significantly improved backdrop compared to the economic conditions at the height of the pandemic during the first half of 2020, founded on a high quality asset portfolio underpinned by prudent risk management. We continue to invest in products, people and technology, which are key enablers to support our future performance while maintaining cost discipline and industry-leading operating efficiency.

While our liquidity profile remains strong, we continue to deploy our balance sheet profitably to enhance Group returns, with ample capacity to support our client franchise through the economic recovery.

The Group also achieved notable milestones in the IBOR[1] transition: FAB is leading the MENA region in the transition to Alternate Reference Rates (ARRs) having signed the first day-1 SOFR[2] deal with a GCC government-related entity, and issuing its inaugural SOFR-linked note. In recognition of the Group’s achievement, FAB won the ‘Deal of the Year – LIBOR Transition’ by MTN-I Awards for the bank’s inaugural GBP denominated SONIA[3] private placement in September 2020.

Our strong capital generation capacity through higher retained earnings and continued optimisation of our risk-weighted assets is enabling us to maintain solid capital ratios, meet evolving regulatory requirements, and build the right foundations to support business growth and sustainable shareholder returns.

[1] IBOR – Interbank Offered Rate

[2] SOFR - Secured Overnight Financing Rate

[3] SONIA - Sterling Overnight Index Average

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