DUBAI: First Abu Dhabi Bank (FAB) , the United Arab Emirates’ biggest lender, said on Wednesday its third quarter net profit fell 24% from a year earlier and flagged caution against an “increasingly challenging global backdrop”.
Gulf banks have been supported by high crude prices, which historically boost economic activity in the oil-rich region. But they are increasingly wary of a possible global economic downturn as central banks hike interest rates to fight inflation.
FAB’s net profit in the third quarter was 2.92 billion dirhams ($795.06 million), slightly beating EFG Hermes’ expectation of 2.86 billion dirhams.
It was up 1% compared to the second quarter. FAB said it was 12% higher when excluding gains from the sale of a stake its payments business Magnati, which it said was 288 million dirhams in the second quarter.
Most Gulf markets retreat on falling oil prices
“Looking ahead, the increasingly challenging global backdrop calls for caution, with recessionary risks looming over several economies,” Group CEO Hana al-Rostamani said in a statement, adding she was “confident in the resilience of this region”.
Impairment charges in the third quarter were at 694 million dirhams, down 13% from a year earlier and up 12% compared to the first quarter “as we continue to strengthen our provision buffers,” FAB said.
Operating costs were at 1.6 billion dirhams, up 1% from a year prior and compared to the second quarter.
Total assets grew 10% to 1.146 trillion dirhams. FAB’s non-performing loans ratio was 3.4% from 3.9% a year prior.
Its liquidity coverage ratio was at 171% from 124% a year earlier. “Although not immune to global headwinds, we believe economic activity in the UAE and broader GCC region will continue to outperform the global backdrop,” the bank said.
FAB said it was well placed to deliver “market-leading” shareholder returns as it expected the UAE to post its highest GDP growth in over a decade, buoyed by higher oil output and prices. It forecast GDP growth of 6.7% this year from a previous expectation of 5.7%.