Biggest U.A.E. Bank Thanks Forex for 10% Increase in Profit

(Bloomberg) -- First Abu Dhabi Bank PJSC reported a 10 percent increase in full-year profit, meeting analysts’ estimates, as foreign exchange gains doubled and impairment charges dropped.

The United Arab Emirates’ biggest lender recommended a dividend of 74 fils a share. That compares with 70 fils for 2017. The lender said in a presentation that it sees profit growing at mid-single digit this year.

Key Numbers

  • FY net income 12 billion dirhams, estimate 12.15 billion (range 12.06 billion to 12.28 billion) (Bloomberg data)
  • FY operating income 19.45 billion dirhams, estimate 19.64 billion (range 19.53 billion to 19.74 billion) (BD)
  • FY foreign exchange gains 2 billion dirhams vs 1 billion dirhams
  • FY impairment charge 1.73 billion dirhams vs 2.38 billion dirhams

Guidance

  • Sees 2019 profit growth at mid-single digit vs 10% in 2018
    • Had forecast profit growth of 8% to 10% for last year and managed to deliver at the upper end of guidance
  • 2019 loan growth guidance at high single digit vs 7% last year
  • Revenue growth seen at mid-single digit vs 3% on an underlying basis
  • Cost to income ratio (ex-integration costs) guidance at 25%-26% vs 25.9%
  • Cost of risk 55bps-65bps vs 48bps
  • RoTE 16%-17% vs 16.2% (16.6% ex-integration costs)
  • Basel III CET1 >13% vs 14%
  • Link to presentation (2019 guidance on page 16)

In Depth

  • First Abu Dhabi Bank results follow rivals Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank
    • All of them beat analysts estimates on profit
  • U.A.E. banks have so far largely managed to escape the impact of slowing economic growth with moderate earnings and provisions for bad loans falling to a five-year low in the third quarter
  • Group CEO says the lender is "realizing significant operating efficiencies and maintaining strong capital, liquidity and risk ratios"
  • First Abu Dhabi Bank beat top international lenders for a second year in a row as the Middle East and North Africa’s top syndicated loans arranger in 2018. It was ranked seventh among arrangers of bond sales in MENA, although still the top regional bank
  • The bank is rated Aa3 at Moody’s; AA- at S&P and Fitch. All have stable outlooks.
    • For ratings, click: FAB UH Equity CRPR

Dig Deeper

For financial statement, click here.

Shares

  • The shares closed 1.1 percent higher at 14.74 dirhams on Thursday before the earnings announcement
  • They have gained 38 percent in 2018 and 4.5 percent this year
  • Trades at 13 times its estimated earnings per share for the coming year
Biggest U.A.E. Bank Thanks Forex for 10% Increase in Profit

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