First Abu Dhabi Bank Posts AED10.92b Net Profit In 2017

First Abu Dhabi Bank, FAB, the UAE’s largest bank and one of the world’s leading and safest financial institutions, reported its financial results for the full year ended 31 December 2017.

FAB delivered a resilient performance in a transitional year with a full year 2017 group net profit at AED10.92 billion, compared to AED11.32 billion in 2016. The adjusted group net profit - excluding integration costs and merger-related amortisation of intangibles, totalling AED601 million in 2017 - at AED11.52 billion, broadly in line with 2016.

Group Revenues were four percent lower year-on-year mainly reflecting softer market conditions, and the Bank’s focus on portfolio optimisation to enhance risk-adjusted returns.

This was offset by lower impairment charges compared to 2016, as well as disciplined cost control and the realisation of substantial synergies related to the merger.

Commenting on the results, H.H. Sheikh Tahnoun bin Zayed Al Nahyan, National Security Adviser and Chairman of FAB, said, "FAB’s 2017 financial results are a clear testament to the sound rationale behind the merger and clearly demonstrate that it was a well-planned and strategic decision, based on solid forward-looking, market perspective and insights.

Our merger, which was officially inaugurated in early 2017, created the UAE’s largest bank, with the aim of actively supporting the UAE’s economy, through combining the solid expertise and strengths of both legacy banks."

Sheikh Tahnoun added, "At the end of our first year, we have created significant value for our shareholders, customers and employees despite challenging market conditions.

Reflecting FAB’s continued focus on delivering top shareholder returns, the bank’s Board of Directors has recommended the distribution of a cash dividend of AED0.70 per share for the financial year ended 31 December 2017.

This implies total cash dividends of AED7.6 billion for FAB’s first year, up 11 percent compared to 2016.

This is the highest combined dividend amount distributed by the legacy banks and further underscores the strategic rationale of the merger.

The recommended dividend proposal is subject to shareholders approval at the Ordinary General Assembly Meeting which is proposed to be held in Abu Dhabi on Sunday, 25th February 2018."

"As we continue to build on our success moving forward, our board and senior leadership are optimistic about our strategic direction for the future of FAB, and we are confident that we will continue to demonstrate sustained growth and meet our goals," he continued.

Abdulhamid Saeed, Group Chief Executive Officer of FAB, added, "We are proud to announce that FAB has achieved a resilient set of results in its first year, as the largest bank in the UAE.

Our adjusted net profit for 2017, excluding integration costs and merger-related amortisation of intangibles, totalling AED601 million in 2017, amounted to AED 11.52 billion, in line with the combined profit of both legacy banks in 2016, despite a challenging global operating environment."

"FAB has moved significantly ahead in its integration journey and in a short period of time we have successfully delivered against many of the milestones that were set, ahead of schedule and realised around AED500 million in cost synergies in our first year alone.

Last year, we also launched and rolled out our new brand which has been implemented across a number of our key customer touch points, regionally and internationally, with the target of completing our rebranding activities by the end of 2018.

"We have also finalised our organisational structure and operating model, and integrated our policies and risk framework. As part of the overall integration, we are also evaluating our local activities and branch network, to enhance efficiency and productivity across the group.

Regionally, we are working on expanding our presence to Saudi Arabia which forms part of FAB’s long-term strategy," Saeed continued.

He went on to say, "The success of our integration journey so far comes as a result of the strong commitment to our plans across the Bank.

2017 was a year of transition for us and we are confident that 2018 will be a year of consolidation and growth, and being the Year of Zayed - inspire and motivate us to achieve further success and reach the vision of our founding father, the late Sheikh Zayed bin Sultan Al Nahyan, and that of our leaders, to support the growth and prosperity of the UAE."

FAB continued to make excellent progress against the targets set in the integration agenda.

Reflecting a strong focus on execution, all planned milestones for 2017 were successfully delivered, including the network and channel rebrand across customer and digital touch-points completed in the last quarter.

While the Group is carrying out a comprehensive strategic review of its international value proposition, rebranding across FAB’s international network is also underway.

As the next key milestone in the integration journey, FAB’s IT systems integration is progressing well and on track to be completed around the end of 2018.

This will enable the bank to unlock further merger benefits both on the cost and revenue side.

Moreover, cost synergies are continuing to materialise quickly with around AED500 million realised in 2017, exceeding expectations for the year.

In parallel, one-time integration costs remain under tight control and were up in the last quarter reflecting accelerated integration momentum.

As of 31st December 2017, the purchase price allocation, PPA, exercise as per IFRS 3 Business Combinations is substantially complete and no significant changes to NBAD’s net asset value are expected by 31st March 2018.

The exercise determined a goodwill amount of AED19.9 billion arising from the merger.

This includes intangible assets of AED2.6 billion to be amortised over a period of 12 years, with a charge of AED138 million recognised in the fourth quarter related to the nine month-period post-merger.