First Abu Dhabi Bank (FAB), the largest lender in the UAE, posted impressive financial results for Q3 2024, with a net profit of AED4.46 billion ($1.2 billion). This marks a 5% year-on-year (YoY) increase, driven by robust revenue growth that offset higher impairment charges. The results exceeded analysts’ expectations, which had predicted a profit of AED4.06 billion, according to LSEG data.
Strong Revenue Growth and Operating Income
FAB’s operating income for Q3 2024 rose significantly by 18% YoY, reaching AED8.20 billion. This growth underscores the bank’s continued ability to generate strong earnings, even in a challenging market environment.
However, FAB’s net interest margin (NIM), a crucial profitability measure, declined by 7 basis points (bps) from the previous quarter to 1.89%. This reduction was attributed to higher cash reserve requirements, increased central bank placements, and a 50bps benchmark rate cut during the period. On a YoY basis, NIM dropped by 8bps.
Increased Impairment Charges and Operating Expenses
Despite higher revenues, FAB saw a sharp increase in impairment charges, which rose by 50% YoY to AED909 million. The increase reflects the bank’s proactive approach in addressing potential risks and maintaining a strong financial position.
Operating expenses also grew by 9% YoY, amounting to AED 1.98 billion for the quarter. FAB’s management attributed the rise to investments in technology and other strategic initiatives aimed at enhancing operational efficiency.
Nine-Month Performance and Asset Growth
For the first nine months of 2024, FAB posted a net profit of AED12.9 billion, representing a 4% YoY increase. The bank’s total assets grew by 5% year-to-date (YTD) and 4% YoY to AED1.2 trillion. This growth further solidifies FAB’s position as the leading bank in the UAE and one of the region’s top financial institutions.
