Is FAB’s 16 percent RoTE Target Within Reach for 2024?
First Abu Dhabi Bank had a strong performance in the first nine months of 2024, with revenue jumping 16 percent to AED 23.9 billion, thanks to increased client activity across their network. Profit before tax also saw a significant rise, up 15 percent to AED 15.3 billion. FAB's net profit grew 4 percent year-on-year to AED 12.9 billion for the same period, and Q3 alone brought in AED 4.5 billion, reflecting a 5 percent increase.
Their total assets reached AED 1.2 trillion, marking a 5 percent growth since the beginning of the year. Loans and advances climbed by 9 percent to AED 528 billion, and deposits increased by 8 percent to AED 820 billion. A notable achievement has been the growth in FAB's international operations, where revenue surged by 33 percent, and assets in this segment now account for 26 percent of the bank’s total.
In terms of financial stability, FAB's asset quality remained solid, with a non-performing loan (NPL) ratio of 3.8 percent. They also maintained a strong liquidity coverage ratio (LCR) of 140 percent. The bank's efficiency was impressive as well, with a cost-to-income ratio of 24.3 percent, supported by continued investments in technology and talent.
For shareholders, the return on tangible equity (RoTE) stood at 17.1 percent, showing the value being created from FAB’s strategic execution, which aligns with their goal of achieving over 16 percent RoTE for 2024 and the medium term.
Hana Al Rostamani, the Group CEO, emphasised that this is the third straight quarter of net profit growth, largely driven by FAB’s client-focused strategy. She highlighted that their approach to both wholesale and personal banking, along with their wealth management offerings, has helped them maintain momentum across their local and international businesses. FAB’s network, especially internationally, continues to be a differentiator, helping to expand and diversify their revenue base.
Additionally, the bank has made significant progress in sustainable and transition financing, having already facilitated AED 216 billion in projects, which is 43 percent of their 2030 goal of AED 500 billion. FAB’s role in supporting the UAE's growth ambitions, both locally and internationally, is evident through their asset growth and contribution to various financial projects.
Lars Kramer, FAB’s Group CFO, noted that the bank's third-quarter net profit of AED 4.5 billion reflects strong business momentum supported by robust economic conditions. Growth in their international franchise played a key role, with revenue from this segment rising 33 percent, now representing 22 percent of the group’s total revenue. The bank's solid credit profile and AA- rating from Fitch further demonstrate its financial strength.
Looking ahead, with a RoTE of 17.1 percent for the first nine months, FAB is on track to exceed its target of 16 percent RoTE for the full year and in the medium term. The bank’s diverse revenue streams and continued focus on expanding client relationships across its international footprint are expected to further drive growth.
Key highlights from Q3 2024 included 12 percent revenue growth in the UAE and 33 percent in their international business. In wholesale banking, investment banking revenue jumped 22 percent, with similar growth in their global markets division. On the consumer side, strong digital capabilities and new-to-bank customers boosted lending by 17 percent and deposits by 9 percent. Plus, they saw a 37 percent rise in assets under management for private banking clients.
