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First Abu Dhabi Bank (FAB), the U.A.E.’s largest bank, reported its profits fell by 3.5% in 2017, a regression it says was caused by costs related to its recent merger. For the year 2017, the bank took in $2.97 billion in profit, compared to $3.08 billion the year prior.
FAB was created from the combination of the National Bank of Abu Dhabi and First Gulf Bank in April 2017, with the merger first announced in July 2016.
Excluding integration and merger-related costs of about $164 million, the bank’s adjusted profits for the year totaled $3.14 billion, broadly in line with 2016. It also reported revenues were 4% lower year-on-year, mainly reflecting softer market conditions—although that was also offset by lower impairment charges compared to 2016.
FAB’s board of directors recommended the distribution of a cash dividend of $0.19 per share, implying total cash dividends of $2.07 billion for its first year, up 11% compared to 2016. FAB said it is the highest combined dividend amount ever distributed by the two banks.
According to FAB’s Group CEO Abdulhamid Saeed, the newly-formed bank has hit many of the integration milestones set out post-merger, resulting in around $136 million in cost synergies in its first year. He added that FAB has finalized its organizational structure and operating model, and integrated it policies and risk framework.
After rolling out the new brand last year, FAB plans to finish the rebranding process by the end of 2018.
“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,” said Saeed.
He went on to say, “2017 was a year of transition for us and we are confident that 2018 will be a year of consolidation and growth.”
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