KHALEEJ TIMES, Wednesday, Jul 29, 2020 | Zul Hijjah 8, 1441
FAB's H1 profit slips 24% on higher impairment charges
First Abu Dhabi Bank (FAB), the UAE's largest lender, on Tuesday reported
that its first-half 2020 net profit fell 24 per cent to Dh4.8 billion,
driven mainly by an increase in impairment charges and lower revenues,
partly mitigated by cost reduction.
In a show of resilience, in the second quarter, FAB recorded a net profit of
Dh2.4 billion, which was flat compared to the first quarter, thanks to its
conservative business approach as higher impairment charges were offset by
revenue growth and cost management initiatives, the bank said in a statement.
André Sayegh, FAB group CEO, said strategic actions have enabled the bank to
further strengthen its balance sheet, with a strong growth in customer deposits
despite significant headwinds.
"Our capital position remains solid and comfortably above regulatory
requirements, even as we proceeded with the repayment of our Additional Tier 1
capital notes in June as a testament to our long-standing commitment to our
global investor base."
"We also accelerated our digital transformation journey, launching a number of
digital-first initiatives aimed at enhancing customer experience and convenience
across a broad range of our products and services. The effective launch of the
e-payment platform Abu Dhabi Pay was also a key milestone, underlining FAB's
strategic role in enabling digital sustainability in the emirate through
innovative payment solutions," said Sayegh.
While the half-year operating income stood at Dh9.4 billion, compared to Dh10.1
billion in the same 2019 period, operating cost dropped three per cent to Dh 2.6
billion and impairment charges rose to Dh1.8 billion, reflecting the challenging
Total assets surged 12 per cent to Dh866 billion with loans and advances rising
five per cent to Dh385 billion year-on-year. Customer deposits grew 12 per cent
year-on-year to Dh519 billion with current account and savings account balances
remaining at a record high of Dh196 billion, FAB said.
James Burdett, group chief financial officer, said the first half profit and
revenues indicate a strong result in a period of unprecedented social and
economic challenges and market volatility, compounded by historically low
"Our core businesses delivered a resilient operating performance despite these
headwinds, demonstrating the benefit of our diversified business model and our
market-leading capabilities. In the context of a challenging and uncertain
environment, we continued to build our provision buffers, leading to a
substantial increase in impairment charges, while our high-quality portfolio and
conservative asset mix are key differentiators," said Burdett.
He said the bank's ongoing focus on cost discipline also led to significant
savings, with various initiatives underway to create future efficiencies. "Our
liquidity and capital ratios further strengthened during the period,
underpinning our robust foundation as we continue to support our core clients,
and as we expect a pickup in demand in the second half of the year."
Liquidity coverage ratio improved to 129 per cent, demonstrating a strong
liquidity and funding profile, while non-performing loan ratio was at 3.9 per
Common Equity Tier 1 (CET1) ratio strengthened to 13.6 per cent, while Tier 1
capital and total capital ratios also remained comfortably above Basel III
regulatory requirements at 15.2 per cent and 16.4 per cent, respectively, the