First Abu Dhabi Bank's fourth-quarter profit climbs 63% on revenue surge

First Abu Dhabi Bank , the UAE 's largest lender by assets, reported a 63 per cent surge in its fourth-quarter net income, as revenue rose and impairment charges fell amid continuing economic momentum in the UAE. Net profit for the three months to the end of December climbed to Dh4.01 billion ($1.09 billion), FAB said on Thursday in a filing to the Abu Dhabi Securities Exchange, where its shares are traded. Quarterly operating income climbed 17 per cent on an annual basis to Dh6.93 billion, driven by a 12 per cent rise in net interest income to Dh4.69 billion. Non-interest income for the reporting period surged 29 per cent year on year to Dh2.24 billion, reflecting strong fee generation momentum and robust client activity across asset classes. Impairment charge for the three last three months of the year fell 10 per cent annually to Dh999 million. “The UAE economy continues to be a compelling story of growth and diversification, with deepening trade ties and economic relationships,” Sheikh Tahnoun bin Zayed, chairman of FAB said. “We have a clear strategy to deliver for our shareholders while supporting the UAE building on its position as a recognised international financial centre, a global trade hub, a nexus of innovation and advanced technology and a thriving business environment.” Banks in the UAE and the six-member GCC are benefitting from continued economic growth momentum despite global headwinds and geopolitical uncertainties. Economies in the broader Middle East and North Africa, especially oil-exporting Gulf nations, have bounced back strongly from the pandemic-induced slowdown, driven by both oil and non-oil sectors. The UAE, the Arab world’s second-largest economy, expanded 3.7 per cent annually in the first half of last year, driven by strong non-oil sector growth as the country continues to pursue its diversification goals, Minister of Economy Abdulla bin Touq said in October. Last month, the UAE Central Bank increased its 2024 growth forecast for the country's economy to 5.7 per cent, from its earlier estimate of 4.3 per cent, due to an expected rise in oil production next year. The banking regulator also raised UAE's non-oil gross domestic product growth to 5.9 per cent and 4.7 per cent, for 2023 and 2024, respectively. Business activity in the Emirates' non-oil private sector economy hit its highest level in more than four years in December, driven by a substantial rise in output and new orders, setting the stage for continued expansion this year. The seasonally adjusted S&P Global purchasing managers’ index – a key gauge of the nation’s non-oil economy – climbed to 57.4 in December, from 57 in November, its highest since mid-2019, setting it well above the neutral 50 mark that separates growth from contraction. FAB, like its regional peers, is also benefitting from higher interest rates that have boost profit margin for lenders over the past few quarters. Most regional central banks peg their currencies to the US dollar and follow the US Federal Reserve's moves on interest rate increases. The US central bank on Thursday held interest rates at their current target range of 5.25 per cent and 5.50 per cent. Fed chairman Jerome Powell squashed hopes of early US interest rate cuts, saying the central bank needed “greater confidence” in the inflation path before it begins dialling back its restrictive monetary policy. FAB said its full-year profit last year hit a record Dh16.4 billion, improving 22 per cent from a year earlier. The 12-month net profit jumped 56 per cent on an underlying basis when excluding gains from the sale of stake in subsidiaries. “FAB’s outstanding performance in 2023 marks the third consecutive year of higher profits, driving greater cash returns for our shareholders,” Hana Al Rostamani, group chief executive, said. “We have built a strong platform for future growth, one that is ideally placed to facilitate the growing trade and investment flows that support our clients’ ambitions.” The yearly operating income grew 32 per cent year-on-year to Dh27.5 billion, driven by business volumes, improved margins and a broad-based growth across the bank's businesses, products and geographies. FAB's non-interest income contributed 34 per cent to group revenue, up from 32 per in 2022. while its net interest income jumped 27 per cent to Dh18.1 billion. Total assets at the end of December grew 5 per cent year-on-year to Dh1.2 trillion. Loans and advances rose 5 per cent annually to Dh484 billion, while customer deposits were up 8 per cent higher year-on year to Dh760 billion for the same period.

First Abu Dhabi Bank's fourth-quarter profit climbs 63% on revenue surge

A fall in impairment charges amid continued economic momentum also boosted quarterly net income