FAB proposes outstanding cash dividend of AED 0.70 per share

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

Resilient performance in transitional year

  • Full year 2017 Group Net Profit at AED 10.92 Billion, compared to AED 11.32 Billion in 2016
  • Adjusted Group Net Profit (excluding integration costs and merger-related amortisation of intangibles, totaling AED 601 Million in 2017) at AED 11.52 Billion, broadly in line with 2016
  • Adjusted Group Net Profit for the fourth quarter (excluding integration costs and merger-related amortisation of intangibles, totaling AED 336 Million) up 18% sequentially and 6% year-on-year
  • Earnings per Share (EPS[1]) at AED 0.96, compared to AED 1.0 in 2016
  • Group Revenue in the fourth quarter up 10% on the back of strong business momentum
  • Full Year Group Revenue at AED 19.53 Billion, down 4% year-on-year amid softer market conditions and portfolio optimisation

Cash dividend of AED 0.70 per share proposed in the first year

  • Board of Directors recommends the distribution of a cash dividend of AED 0.70 per share, implying total cash dividends of AED 7.6 Billion for 2017 – the highest combined dividend amount distributed by FGB and NBAD – up 11% compared to 2016

Integration exceeds expectations

  • All planned milestones fully delivered as per integration agenda
  • Around AED 500 Million of cost synergies already realised in integration year 1
  • Integration costs tightly controlled
  • “Purchase Price Allocation” exercise is substantially complete

Strong balance sheet and healthy ratios

  • Loans and advances at AED 330.5 Billion, up 1% quarter-on-quarter and 1% lower year-on-year
  • Customer deposits at AED 395.8 Billion, up 4% both sequentially and year-on-year
  • Highly comfortable liquidity position with loans-to-deposit ratio improving to 83.5%
  • Cost-to-income ratio (excluding integration costs) at 27.7%, improving from 28.3% the previous year
  • Healthy asset quality metrics with Non-Performing Loan ratio at 3.1% and provision coverage at 120%
  • Solid profitability with Return on Tangible Equity at 14.8%, or 15.5% excluding integration costs
  • Common Equity Tier-1 (CET1) ratio at 14.5%, comfortably in excess of regulatory requirements
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Commenting on the results, His Highness Sheikh Tahnoon Bin Zayed Al Nahyan, 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’.”

His Highness 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 AED 0.70 per share for the financial year ended 31 December 2017. This implies total cash dividends of AED 7.6 Billion for FAB’s first year, up 11% 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, February 25th, 2018.”

His Highness concluded: “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.”

 

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 (totaling AED 601 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 AED 500 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.”

He concluded: “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.”

A successful integration journey

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 AED 500 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 31 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 31 March 2018. The exercise determined a goodwill amount of AED 19.9 Billion arising from the merger. This includes intangible assets of AED 2.6 Billion to be amortised over a period of 12 years, with a charge of AED 138 Million recognised in the fourth quarter related to the nine month-period post-merger.

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