H1’22 highlights:
- Group Net Profit at AED 8.0 Billion, up 50% yoy; annualised Earnings per Share at AED 1.43
- Total Income at AED 12.5 Billion, up 31% yoy, includes AED 3.1 Billion net gain on sale of majority stake in Magnati
- Impairment charges (net) at AED 1.0 Billion, 9% lower yoy; annualised cost of risk at 47 basis points
- Operating costs at AED 3.1 Billion, up 8% yoy excluding Bank Audi Egypt inclusion, reflects ongoing investments to drive growth and transformation
Q2’22 highlights:
- Group Net Profit at AED 2.9 Billion, up 13% qoq on an underlying basis when excluding gains on Magnati stake sale
- Operating income at AED 5.0 Billion, 4% lower yoy, up 12% qoq driven by higher interest and non-interest income
- Impairment charges (net) at AED 582 Million, 14% lower yoy, up 27% qoq
- Operating costs at AED 1.6 Billion
Double-digit loan growth reflects sustained business momentum, while liquidity, asset quality and capital position remain strong
- Loans, advances and Islamic financing at AED 459 Billion, up 6% sequentially and 12% ytd
- Customer deposits at AED 648 Billion, up 8% sequentially and 5% ytd; CASA balances at AED 291 Billion, are up 15% yoy
- Liquidity Coverage Ratio (LCR) at 135% underlines strong liquidity position
- Healthy asset quality metrics with NPL ratio and provision coverage at 3.6% and 100%, respectively
- Common Equity Tier 1 (CET1) at 12.6%, comfortably above regulatory requirements
“FAB delivered a strong performance in the first six months of 2022 with a 50% increase in net profit compared to the same period in 2021.
Despite heightened global market volatility, our core businesses maintained solid growth momentum reflecting healthy pipeline execution across our diversified franchise, and our ongoing strategic focus on deepening client relationships.
Almost AED 50 Billion net incremental lending was extended by FAB year-to-date, which is a record for the Group for any half-year period. This demonstrates buoyant regional activity, FAB’s leading origination capabilities, and the fundamental strength of our balance sheet as we continued to deploy our resources and expertise to support our client franchise with their local and cross-border banking needs.
During the period, we continued to focus on unlocking opportunities for our clients and communities through specialised offerings and innovative solutions, and by strengthening our footprint in target markets. We are also proud of our leading role in building a sustainable future for all, and the tangible progress we are making against our ESG ambitions.
Looking ahead, we must recognise a more challenging global economic outlook marked by turbulent market conditions and inflationary pressures. As we enter the second half of the year, we remain committed to our clients and stakeholders, and confident in our ability to deliver sustainable shareholder returns as we pursue our growth and transformation plans.”
“FAB produced another solid set of results in the second quarter with a net profit of AED 2.9 Billion, up 13% sequentially on an underlying basis, bringing first half 2022 profit to AED 8.0 Billion. Annualised return on tangible equity for the first half of 2022 improved to 19.5% from 13.6% in H1’21.
In the last quarter, all our core businesses delivered top line growth sequentially, led by a double-digit growth in Investment Banking and Corporate and Commercial Banking, which is a strong result in the context of adverse global market conditions. This was helped by strong volumes, early benefits from rising interest rates, and healthy client activity in Global Markets consistent with our strategy to enhance cross-sell. Risk was prudently managed across the Group, while the year-on-year growth in operating expenses reflects continued investments in franchise growth and transformation.
We have maintained a strong liquidity position, with Group LCR at 135%, and our balance sheet is optimally positioned to continue to benefit from rising interest rates. Despite balance sheet growth and market and regulatory headwinds, capital buffers remain strong with June-end Group CET1 at 12.6%.
Although the supportive regional economic backdrop and the diligent execution of our strategy represent significant tailwinds, we remain cautious in the context of heightened market volatility, persistently elevated global inflation and rapidly evolving monetary policy.”
ECONOMIC OVERVIEW AND OUTLOOK
Global economic conditions weakened during Q2’22 with inflationary pressures driving aggressive monetary policy tightening, and multiple headwinds fuelling stagflation concerns and market volatility.
In contrast, the UAE economy continued to demonstrate resilience buoyed by strength in oil prices, moderate inflation, a recovery across key economic sectors including real estate and tourism, and ongoing structural reforms to drive economic growth and diversification. The underlying strength of the UAE economy was also highlighted by PMI data, which remained in expansionary territory for the 19th consecutive month. Despite ongoing global uncertainty, we maintain a positive outlook for UAE economic growth this year and beyond. We now expect real Gross Domestic Product (GDP) growth to reach 5.7% in 2022 and 4.4% in 2023 (from previous forecasts of 4.8% and 4.0%, respectively) with oil price averaging USD 108 /bbl and inflation at around 5%.
