FGB, the Abu Dhabi-based bank formerly known as First Gulf Bank, said that its first-quarter profit declined by 6.3 per cent as fee income dropped amid falling demand for debt as the economy cools.
Net income decreased to Dh1.33 billion in the first three months of the year versus Dh1.41bn in the same period last year, the bank said.
Net interest and Islamic financing income was unchanged for the quarter at Dh1.58bn compared with the same period last year. Net fee and commission income slipped by 10 per cent year-on-year to Dh365 million during the quarter.
“Due to prevailing global market conditions, our priority was to focus on long-term sustainability in returns, rather than short-term revenue growth, to maintain strong asset quality, which is in the best interest of shareholders,” said Andre Sayegh, the chief executive.
“The fact that global operating conditions are expected to remain challenging is a market reality. However, we have the right strategy and fundamentals in place to continue navigating current headwinds and turning challenges into opportunities, until the economic cycle reverses.”
Mr Sayegh said last month that he was expecting low single-digit growth across the board in earnings, revenue and loan growth this year.
He said at the time that net interest margins would improve because when oil prices were elevated there was a lot of cash circulating in the banking system – but now that deposits from the sale of crude are dwindling the reduction of the supply of cash would raise borrowing costs.
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