Abbey Bank’s profit rises 56% to N2.26bn on earnings surge

First Abu Dhabi Bank (FAB), the largest bank in the United Arab Emirates by assets, announced a 6% increase in net profit for the third quarter of its fiscal year ending September 30, 2023. The bank reported a net profit of 5.74 billion dirhams ($1.56 billion), an increase from 5.39 billion dirhams a year earlier. Net profit for the first nine months of the year rose 3% to 16.50 billion dirhams, primarily due to an 11% rise in net interest income.

Lars Kramer, FAB's Chief Financial Officer, stated that the bank's margins remained resilient, with loans to customers growing as a result of "continued momentum" across its franchises. Net loans and advances increased by 10% during the nine-month period, while deposits climbed by 5%, raising total assets to 1.47 trillion dirhams at the end of the reporting period.

The Middle East conflict and its impact on various sectors, such as hospitality and tourism, are expected to hinder recovery in the UAE economy. The International Monetary Fund (IMF) predicts the UAE economy will contract by 3.9% in 2026 before recovering in 2027.

FAB's net impairment charges surged 33% to 3.10 billion dirhams in the first nine months, reflecting a cautious approach to risk management due to the evolving risk environment. Abu Dhabi sovereign fund Mubadala holds nearly 40% of FAB, and the Abu Dhabi royal family owns around 20% of the bank, according to data compiled by LSEG.