Newly merged NBAD and FGB reports 12.4 per cent profit for the first quarter of 2017
General Assembly Meeting to be held on 24 April 2017 to approve name change of combined bank from National Bank of Abu Dhabi to First Abu Dhabi Bank.
Led by growth in revenues, NBAD and FGB has recorded a pro-forma Group Net Profit of AED 2.93 billion for the first quarter of 2017, a 12.4 per cent increase from AED 2.60 billion for the same period last year.
According to a statement, Pro-forma Group Revenues were recorded at AED 5.20 billion, up 8.5 per cent compared to AED 4.80 billion in Q1 2016, on the back of healthy business volumes and investment gains. The realisation of cost synergies of AED 75 million during the first quarter led to a 1.5 per cent reduction in pro-forma operating expenses (ex-integration costs) and improvement in Cost-to-Income ratio (ex-integration costs) to 27.3 per cent.
The entity recorded healthy growth in pro-forma Loans and Advances of 4.6 per cent to AED 368 billion; pro-forma Customer Deposits up 11.1 per cent to AED 416 billion resulting in comfortable Loans to Deposits Ratio of 88 per cent. It reported robust asset quality with pro-forma NPL ratio at 2.5 per cent and strong provision coverage of 114 per cent.
Other key ratios on pro-forma basis included a Net Interest Margin of 2.1 per cent, CET1 ratio of 14.7 per cent, Return on Tangible Equity (RoTE) (annualised) at 16.0 per cent and Return on Risk Weighed Assets (annualised) at 2.5 per cent.
These results were achieved on the back of a healthy operating performance driven by higher business volumes and investment gains, coupled with disciplined risk management and the realisation of cost synergies in relation to the merger between the two banks.
Commenting on this performance, Abdulhamid Saeed, Group CEO of the combined bank, said, “With the merger of FGB and NBAD now effective, we are starting First Abu Dhabi Bank’s (subject to shareholder approval) journey on a solid footing thanks to robust fundamentals at the end of Q12017, positioning us well to successfully execute our integration plan. We have already achieved a number of key milestones since the completion of the merger, which is a strong testament to the exceptional merits of bringing two highly complementary businesses together, as we already began to draw on our combined strengths and realise synergies for the benefit of all our stakeholders.”
The integration journey is believed to have begun with a strong start with seamless merger completion as per initial timeline and realisation of cost synergies. Strong credit profile of combined bank led to ratings affirmation of NBAD of AA- or equivalent by the three major credit rating agencies post-merger completion, and removal of CreditWatch ‘Negative’ by S&P to a ‘Stable’ outlook; FGB ratings were withdrawn post-merger.
“The combined bank delivered a good set of results in the first quarter of 2017, in spite of challenging operating conditions. Pro-forma Group net profit increased by 12.4 per cent from last year, driven by healthy activity across our various businesses and notable improvements in efficiency and asset quality. Our liquidity profile has strengthened and our capital position is robust with CET1 ratio of 14.7 per cent which places us in a positive standing to comply with the Basel III regulatory framework. The affirmation of our AA-, Aa3 and AA- credit ratings by Fitch, Moody‟s and Standard & Poor‟s, respectively, is also a key milestone for the new bank, recognising its strong credit profile and unique ability to navigate the evolving economic, banking and regulatory landscape,” added Saeed.
Providing an outlook for the year as well as the road ahead for the combined entity, Saeed explained, “While 2017 is poised to be a transitional year for the economy and for the banking industry, we are looking ahead with confidence and a clear focus on driving individual and institutional prosperity by putting our customers first, as we continue to deliver an extensive range of fully personalised solutions, products and services to meet their needs.”
“Over the next few months in our integration journey, we will be focusing on establishing a strong platform across our various businesses to ensure that we have the right infrastructure to deliver a harmonised banking offering across our various channels. As the largest bank in the UAE and one of the world’s largest and strongest financial institutions, we are firmly on track to move forward and pursue growth opportunities across UAE, MENA region and beyond. At our upcoming General Assembly Meeting on 24 April, we will be proposing to change the name of our institution to “First Abu Dhabi Bank”—a name that embodies the UAE’s vision for growth and prosperity, whilst reconfirming our commitment to driving top shareholder value as a financial services leader.”