FAB first-quarter profit at record high after Magnati stake sale
Net income for the first three months of the year climbed to $1.4bn
First Abu Dhabi Bank, the UAE’s largest lender by assets, more than doubled its first-quarter net income to a record high, driven by the sale of its majority stake in its payments business and improved performance of the bank’s core business.
Net profit attributable to shareholders for the three months to the end of March surged to Dh5.1 billion ($1.4bn), the lender said in a statement on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.
Quarterly income includes a Dh2.8bn net gain from the sale of a majority stake in its payments business Magnati to New York-listed Brookfield Business Partners. The sale announced in February valued Magnati at about $1.15bn.
FAB’s first-quarter earnings beat Arqaam Capital’s net profit forecast of Dh3.05bn. EFG Hermes had estimated its quarterly net income at Dh3.1bn.
Core underlying operational performance also boosted the bank’s profitability, which was driven by higher net interest income, a pick-up in fees and commissions and bigger contribution from Bank Audi Egypt to group revenue that helped in offsetting lower trading and investment income during the reporting period.
Sale of the Magnati stake crystallises “significant value for our payments business, paving the way for accelerated growth with a long-term strategic partner as we remain at the forefront of the region’s payments and digital agenda”, said Hana Al Rostamani, FAB group chief executive.
“Our core businesses performed well during a period of sustained buoyant economic activity in the UAE, capitalising on a healthy pipeline, and growing business and consumer confidence.”
FAB’s total income jumped 66 per cent annually to Dh7.26bn while operating income for the reporting period climbed 2 per cent to Dh4.5bn. It recorded a 9 per cent rise on an underlying basis, excluding Magnati-related and real estate gains during the first quarter.
Impairment charges for loan losses dropped to Dh457 million at the end of March, from Dh470m recorded in the first three months of 2021, reflecting the continued economic recovery in the UAE. The bank’s non-performing loans and its provisions coverage ratios came in at 3.8 per cent and 98 per cent, respectively.
The UAE economy bounced back strongly from the pandemic-driven slowdown last year and has continued to grow this year despite global geopolitical headwinds and pandemic-related uncertainties. The Arab world’s second-largest economy introduced fiscal and monetary stimulus measures worth Dh388bn, including the Dh50bn Targeted Economic Support Scheme, parts of which have been extended by the Central Bank of the UAE to mid-2022.
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