UAE banks recently benefited from an increase in credit demand as regional governments make investments in infrastructure and tourism to diversify their economies away from oil.
First Abu Dhabi Bank (FAB), the largest lender in the United Arab Emirates (UAE) in terms of assets, reported a 29% annual increase in its second-quarter net profit, driven by diversified revenue growth.
The company started in 2017 through the merger of First Gulf Bank and the National Bank of Abu Dhabi.
The lender stated to the Abu Dhabi Securities Exchange, where its shares are traded, that its net profit attributable to shareholders for the three months ended in June has risen to Dh5.51 billion ($1.5 billion).
Net interest income during the quarter jumped to Dh4.37 billion, while net fee and commission income increased to Dh1.1 billion.Net income from Islamic investment and financing products also rose by over 11% to Dh576 million during that time.
UAE banks recently benefited from an increase in credit demand as regional governments make investments in infrastructure and tourism to diversify their economies away from oil. The bank’s growth follows as the UAE economy expands beyond oil as part of its diversification efforts.
FAB, whose largest shareholder is the $330 billion sovereign wealth fund Mubadala, reported that its non-interest income increased by over 60% to 4.5 billion dirhams in the second quarter due to fees and commissions. Its net interest income was around five billion dirhams, up 1% from last year.
The Chief Financial Officer (CFO), Lars Kramer, stated that the company achieved double-digit revenue from all divisions. He added that they gave second-quarter profit thanks to their investment in technology, artificial intelligence (AI), and careful risk management.
Lars Kramer claimed that FAB has robust capital, liquidity, and a high-quality risk profile, which enables it to handle the changing market conditions.
Hana Al Rostamani, the group chief executive, also mentioned that the lender is moving towards expanding internationally.
For the past few years, the lender has been trying to buy businesses in the Middle East and North Africa.
In June 2022, by completing the merger of Bank Audi Egypt and its Egyptian operations, the lender strengthened its market position.
The combined company, under the name FABMISR, is one of the biggest international banks in the Egyptian market with over $10 billion in assets.
In February 2022, the lender also made an offer to buy 51% of Egypt’s biggest investment bank, EFG Hermes. However, it retracted the offer later due to unstable macroeconomic conditions and uncertainty in the global market.
Ms. Al Rostamani stated that the lender is open to buying opportunities in the MENA (Middle East and North Africa) region and other markets as long as the transaction makes financial sense.
The UAE economy jumped by 4% last year thanks to robust expansion in the non-oil sector, with real gross domestic product reaching Dh1.776 trillion. The UAE Central Bank predicts that real gross domestic product (GDP) will expand by 4.4% in 2025 and 5.4% in 2026.
FAB reported a 26% increase in its net profit to Dh10.63 billion in the first half of the year. It broke its record of the Dh10 billion mark for the first time in six months.
The lender stated that it was due to robust commercial activity and broad-based growth supported by an expanding client base, diversified development across crucial economic sectors, and an increase in customer acquisitions.
Customer deposits increased by 4% to Dh813 billion, while loans, advances, and Islamic investment surged 7% to Dh568 billion. The bank’s non-performing loan ratio jumped to 2.84%. The total assets have increased by over 11% to Dh1.3 trillion.