First Abu Dhabi Bank Sets New Benchmark with Impressive Q1 Results

First Abu Dhabi Bank (FAB), the UAE’s largest lender by assets, has delivered its strongest first-quarter performance in history, underscoring its resilience and strategic agility in a dynamic economic landscape. With net profit surging 23% year-on-year to AED5.13 billion ($1.4 billion) and total assets surpassing AED1.3 trillion ($354 billion) for the first time, FAB’s Q1 2025 results highlight a bank in command of its growth trajectory.

Key Financial Highlights

The bank’s revenue rose 11% to AED8.81 billion, driven by a 22% jump in non-interest income, which now accounts for 43% of total revenue. This diversification reflects FAB’s success in expanding fee-based and trading activities, aligning with its long-term strategy to reduce reliance on traditional lending margins. Loans and deposits grew by 8% and 4% year-on-year, respectively, while the net interest margin expanded to 1.97%, a 4-basis-point increase from the previous quarter.

Operational efficiency also shone: the cost-to-income ratio tightened to 22.3%, down from 24% in Q1 2024, and return on tangible equity (RoTE) rose to 20.4%, surpassing the bank’s medium-term target of above 16%. These metrics signal FAB’s ability to generate strong returns while maintaining disciplined cost management.

Growth Drivers: Diversification and International Ambitions

FAB’s performance was bolstered by robust contributions across all business segments:
- Investment Banking & Markets: Revenue grew 15%, fueled by strong flow product performance and client activity in capital markets.
- Wholesale Banking: Revenue increased 12%, with loans to corporate and institutional clients rising 13%.
- International Expansion: Loans and deposits in overseas markets surged 19% and 13%, respectively, reflecting FAB’s focus on geographic diversification.

The UAE’s economic momentum, particularly in sectors like energy, transport, and government-related entities (GREs), provided a tailwind. FAB’s cross-border transaction banking capabilities and deep client relationships in these sectors have proven instrumental in driving growth.

Digital Innovation and Customer-Centric Strategies

FAB’s investments in technology are paying dividends. The bank’s AI-driven processes have streamlined operations, with straight-through approvals for credit card and personal loan applications improving efficiency. Its mobile wallet service, Payit, now boasts over 1 million users, a milestone underscoring its push into digital banking. Net promoter scores and digital engagement metrics also saw improvements, signaling enhanced customer satisfaction.

Risk Management and Capital Strength

FAB’s balance sheet remains a pillar of stability. With an AA- credit rating, its liquidity coverage ratio (LCR) stood at 138.6%, well above regulatory requirements, and its loan-to-deposit ratio at 81.4% reflects prudent funding practices. Asset quality metrics also remain strong, with a non-performing loan (NPL) ratio of 2.24% and a provision coverage ratio of 150.1% (260% including collateral).

Outlook and Investment Perspective

Group CEO Hana Al Rostamani emphasized FAB’s commitment to leveraging UAE economic growth, innovation, and sustainable returns. CFO Lars Kramer highlighted contributions from commercial momentum, resilient margins, and disciplined risk management, positioning FAB to capitalize on opportunities in energy, infrastructure, and cross-border trade.

The bank’s Q1 results demonstrate that its strategic initiatives—diversification, digital transformation, and international expansion—are aligning with the UAE’s broader economic ambitions. With RoTE at 20.4%, a record asset base, and a robust capital buffer, FAB is well-positioned to sustain its growth trajectory.

Conclusion

First Abu Dhabi Bank’s Q1 2025 results are a testament to its status as a regional financial powerhouse. The bank’s ability to grow non-interest income, expand its international footprint, and maintain industry-leading efficiency metrics positions it to deliver consistent returns. With the UAE’s economy projected to grow at 2.5-3% annually through 2025, FAB is poised to benefit from both domestic and regional opportunities.

Investors should take note: FAB’s strong fundamentals—20.4% RoTE, a 2.24% NPL ratio, and a 22.3% cost-to-income ratio—signal a bank that is not only thriving today but also building for the future. As FAB continues to integrate AI, expand digital services, and capitalize on the UAE’s strategic sectors, its leadership position in the region’s financial landscape remains unshaken.