The United Arab Emirates’ largest bank by assets, First Abu Dhabi Bank (FAB), has kicked off 2025 with a stellar performance, reporting a record-breaking net profit of AED 5.13 billion ($1.4 billion) for the first quarter, a 23% year-on-year increase, as announced on April 29, 2025. This remarkable achievement, coupled with a 22% rise in profit before tax to AED 6.13 billion, underscores FAB’s robust business momentum, strategic execution, and ability to capitalize on global growth opportunities. Driven by diversified revenue streams, strong client engagement, and a thriving UAE economy, FAB’s Q1 2025 results highlight its position as a leading financial powerhouse in the Middle East and beyond. This blog delves into the key drivers behind FAB’s success, the role of its international expansion, and the broader implications for the region’s financial landscape.
Diversified Revenue Streams Fuel Profit Surge
FAB’s exceptional Q1 2025 performance was propelled by an 11% year-on-year increase in operating income, reaching AED 8.81 billion, despite the introduction of higher UAE corporate taxes. A significant contributor to this growth was the bank’s non-funded income, which accounted for 43% of group revenue, up from 38% in the first half of 2024. Fees and commissions surged to AED 1.2 billion, a notable increase from AED 981 million in Q1 2024, reflecting strong client activity across diverse segments. Net interest income also crossed the AED 5 billion mark, supported by a resilient net interest margin (NIM) of 1.97%, which improved by 4 basis points quarter-on-quarter and 5 basis points year-on-year. This balanced revenue mix, combining robust interest and non-interest income, underscores FAB’s strategic focus on diversification, a key pillar of its sustained profitability.
The bank’s performance was strong across all business lines. Investment Banking and Markets led with a 15% year-on-year revenue increase, driven by a 56% surge in equity and debt capital market transactions, raising $29 billion for clients. Wholesale Banking saw a 12% revenue rise, supported by 13% growth in loans and 18% in deposits, reflecting robust client demand. The Personal, Business, Wealth, and Privileged Client Banking Group reported an 11% year-on-year revenue increase, fueled by strong retail momentum, new customer acquisitions, and enhanced customer experiences through advanced technology and AI integration. Notably, FAB’s wealth and private banking franchise saw a 57% year-on-year growth in assets under management, signaling its growing influence in high-net-worth client services.
International Expansion as a Growth Engine
FAB’s international franchise played a pivotal role in its Q1 2025 success, with overseas revenue growing 33% in Q3 2024 and continuing to contribute significantly in the first quarter of 2025. Operating in 20 markets, including the UK, US, Brazil, India, Southeast Asia, and the Middle East, FAB’s international operations saw loans and deposits rise by 19% and 13% year-on-year, respectively. This growth reflects the bank’s strategic alignment with global trade and investment flows, positioning it as a key facilitator of cross-border financial activities. The integration of FABMISR, its Egyptian subsidiary, further strengthened its regional presence, with FABMISR reporting a 31% year-on-year growth in core operating performance in Q1 2025 after neutralizing foreign exchange impacts. Egypt remains a strategically important market, with FABMISR’s net loans reaching EGP 153.4 billion and customer deposits growing to EGP 288.9 billion by March 2025.
The bank’s global footprint is underpinned by its AA- credit rating, the strongest in the MENA region, and a robust balance sheet with total assets surpassing AED 1.3 trillion for the first time, a 6% year-on-year increase. FAB’s liquidity and capital positions remain strong, with a Common Equity Tier 1 (CET1) ratio of 13.5% and a liquidity coverage ratio (LCR) of 142%, well above regulatory requirements. These metrics, combined with a cost-to-income ratio of 22.3% (improved from 24% in Q1 2024) and a reduced non-performing loans (NPL) ratio of 3.3%, demonstrate FAB’s operational efficiency and prudent risk management.
Leveraging UAE’s Economic Boom and Sustainability Leadership
FAB’s stellar performance is closely tied to the UAE’s thriving economy, projected to grow at 5.2% in 2025, driven by non-oil sector diversification and pro-business policies. The bank has capitalized on this growth, with UAE revenues rising 12% in Q3 2024 and maintaining strong momentum into 2025. FAB’s strategic focus on sustainable finance further enhances its leadership, with AED 284 billion facilitated in sustainable and transition financing to date, representing 57% of its 2030 target of AED 500 billion. As a regional pioneer, FAB issued the first MENA bank report aligned with the Taskforce on Nature-Related Financial Disclosures (TNFD) framework and maintains top-tier ESG ratings, including the best Refinitiv ESG Score (top 6% worldwide) and an MSCI ESG Rating of AA. These efforts align with the UAE’s net-zero ambitions and position FAB as a global leader in sustainable banking.
The bank’s digital transformation initiatives, including AI integration and the expansion of its mobile wallet Payit to over 1 million customers, have improved customer engagement and operational efficiency. These innovations have driven a higher Net Promoter Score and reinforced FAB’s commitment to delivering cutting-edge financial solutions. Group CEO Hana Al Rostamani emphasized, “We continue to execute on our strategic priorities, capitalizing on the growth of the UAE economy and across our international footprint. Our return on tangible equity increased to 20.4%, reflecting our focus on value creation.”
Implications for the Region’s Financial Landscape
FAB’s record-breaking Q1 2025 results signal a broader trend of resilience and growth in the UAE’s financial sector, which serves as a hub for global investment and trade. The bank’s ability to deliver double-digit revenue growth amidst global uncertainties, such as fluctuating oil prices projected at $70 per barrel and anticipated interest rate cuts, highlights its adaptability and strategic foresight. By deepening client relationships and expanding its international presence, FAB is not only strengthening its position as the UAE’s global bank but also setting a benchmark for regional peers like Emirates NBD and Abu Dhabi Islamic Bank.
For investors, FAB’s performance underscores the UAE’s attractiveness as a financial powerhouse, offering opportunities in banking, sustainable finance, and digital innovation. The bank’s 3% stock price rise following the Q1 announcement reflects strong market confidence in its growth trajectory. However, challenges such as geopolitical risks and potential economic slowdowns in developed markets like the US and Europe could impact future performance, necessitating continued vigilance.
A Bright Outlook for FAB and the UAE
First Abu Dhabi Bank’s 23% profit surge to $1.4 billion in Q1 2025 is a testament to its strategic vision, diversified business model, and ability to leverage the UAE’s economic momentum. With a robust balance sheet, strong international growth, and a commitment to sustainability and innovation, FAB is well-positioned to navigate the evolving global financial landscape. As it continues to drive value for shareholders and clients, FAB’s success reinforces the UAE’s role as a dynamic hub for finance and investment, paving the way for sustained growth and regional leadership in the years ahead.