Awards for Excellence 2019
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Perhaps the greatest sign that a merger has been successful is if it motivates others to follow suit. That has certainly been the case with the formation of First Abu Dhabi Bank, the Emirati financial institution which we recognise this year as having effected the best bank transformation across the Middle East.
Born in 2017 from the merger of First Gulf Bank and National Bank of Abu Dhabi, national giants in their own right, FAB has quickly proven that it is more than the sum of its parts, and contributed in no small measure to the wave of banking M&A that the region has experienced over the past two years.
Despite the immense difficulties of merging two complex structures of the size of FGB and NBAD, it completed the integration as early as December 2018. By then, FAB had already achieved 75% of the cost synergies it had projected by 2020.
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Abdulhamid Saeed |
Under the stewardship of CEO Abdulhamid Saeed, the bank last year achieved net profit of AED12 billion, up 10% from 2017, its first year of activity. Cost to income, meanwhile, improved from 27.7% to 25.9%, while return on equity rose from 14.6% to 16.2%.
In other words, FAB has not only managed to merge the two banks’ operations, it is also thriving as a result of that combination.
Widely praised among the region’s bankers for its cost efficiency, FAB is just as focused on prudent growth, achieving a 6% increase in its loan book in 2018 for a non-performing loan ratio of just 3.1%.
Perhaps more significantly still, by April of this year, FAB’s market capitalisation had overtaken that of Qatar National Bank, long the largest bank in the Middle East and North Africa. Further proof, if needed, that Abu Dhabi has successfully created in FAB a national champion to rival even the best and biggest in the region.
It has been rumoured that FAB may now look to merge with Abu Dhabi Islamic Bank, though both organisations deny this. Whether or not this happens is anyone’s guess, but FAB has certainly proven that it knows how to deliver when it comes to banking M&A.
