Bulletin: First Abu Dhabi Bank's Higher Market-Based Income May Make Earnings Less Predictable

DUBAI (S&P Global Ratings) Jan. 28, 2022--S&P Global Ratings today said that First Abu Dhabi Bank P.J.S.C. (FAB)'s 19% bottom line increase in 2021 and ongoing capital conservation policies demonstrate the bank's resilience to operating stresses, but a key source of income last year may lead to volatile profitability going forward. FAB's (AA-/Stable/A-1+) 2021 trading gains were three times higher than the 2017-2020 annual average and accounted for nearly 30% of operating revenue or 45% of net profit. Although this shows the bank's capacity to quickly generate alternative income streams, we understand that a large portion of the gains are unrealized. Although higher net income is supportive of our view of FAB's ability to build capital organically, we generally take

...January 28, 2022 DUBAI (S&P Global Ratings) Jan. 28, 2022--S&P Global Ratings today said that First Abu Dhabi Bank P.J.S.C. (FAB)'s 19% bottom line increase in 2021 and ongoing capital conservation policies demonstrate the bank's resilience to operating stresses, but a key source of income last year may lead to volatile profitability going forward. FAB's (##-/Stable/A-1+) 2021 trading gains were three times higher than the 2017-2020 annual average and accounted for nearly 30% of operating revenue or 45% of net profit. Although this shows the bank's capacity to quickly generate alternative income streams, we understand that a large portion of the gains are unrealized. Although higher net income is supportive of our view of FAB's ability to build capital organically, we generally take a cautious stance on banks delivering earnings growth through less stable sources of income....

Bulletin