MANAGEMENT DISCUSSION & ANALYSIS REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2023
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FAB
First Abu Dhabi Bank
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MANAGEMENT DISCUSSION & ANALYSIS REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2023
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FAB
First Abu Dhabi BankAbu Dhabi, 20 July 2023
FAB delivers record second quarter and half year 2023 results
First half 2023 net profit at AED 8.1 billion, up 65% year-on-year1
Operating income increased 44% to AED 13.6 billion
Second quarter 2023 net profit at AED 4.2 billion, up 7% sequentially and 61% year-on-year1
• Record underlying performance with first half 2023 net profit at AED 8.1 billion, implying a Return on Tangible
Equity (ROTE) at 18.6%
• Consistent performance demonstrates solid strategy execution as the regional financial institution of choice with
total assets surpassing AED 1.1 trillion, powering cross-border trade, economic growth and the transition to a low-
carbon future
• Recent rating affirmations by Moody’s (Aa3) and S&P (AA-), underline superior credit profile, unique franchise
strength and resilience through the cycles
• Double-digit revenue growth driven by sustained momentum across all business lines, improved margins, continued
strength in fee-based businesses, and higher market-related income
• Cost and risk discipline maintained with Group cost-to-income ratio at 25.2%, and healthy asset quality metrics
• Robust foundation underpinned by strong organic capital generation with June-end 2023 Group CET1 ratio at 13.6%
H1’23 Key Performance Indicators
Return on Return on Cost/Income Ratio Liquidity Coverage CET1
Tangible Equity Risk-weighted Assets Ratio
18.6% 2.8% 25.2% 159% 13.6%
Record profitability reflects improvements in underlying operating performance
across all business lines capitalising on sustained commercial momentum
Key highlights: H1’23
• Group Net Profit at AED 8.1 billion, up 65% yoy1 on an underlying basis, implying Earnings Per Share of AED 0.71
• Group operating income at AED 13.6 billion, up 44% yoy, on strong business volumes and improved margins, benefits of high
interest rates, coupled with strength in fee-based businesses and higher market-related income
• Non-interest income contribution to Group revenue increased to 34%, underlining continued strategic focus on revenue
diversification
• Cost discipline maintained amid continued investments to drive digitisation, further efficiencies and future growth; higher
income supports significant improvement in Cost/Income ratio to 25.2%
• Impairment charges (net) at AED 1.47 billion, up 42% yoy, translating into an annualised cost of risk at 58bps
1 Excluding Magnati-related capital gains in 2022
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT
2Key highlights: Q2’23
• Q2’23 Net Profit at AED 4.2 billion, up 7% sequentially and 61% yoy1
• Operating income at AED 6.8 billion, up 37% yoy driven by double-digit growth in interest and non-interest income
• Operating costs at AED 1.7 billion, up 3% qoq and 9% yoy on continued investments
• Impairment charges (net) at AED 676 million, 15% lower qoq
Powering economic growth and cross-border trade as a global partner for our clients
• Loans, advances and Islamic financing at AED 483 billion, up 5% year-to-date as the Group continues to gain market share in
key segments
• Customer deposits at AED 745 billion up 6% ytd with Current Account and Savings Account (CASA) balances at a new high of
AED 333 billion, reflecting strong performance in cash management, consistent growth in the client base and strengthened
propositions
• Group liquidity and funding profile remains very strong with June-end 2023 Liquidity Coverage Ratio (LCR) comfortably
above regulatory thresholds at 159%
• Prudent risk management maintained with adequate provision buffers and healthy asset quality metrics
• Solid capital generation drives further expansion in Common Equity Tier 1 (CET1) strengthening to 13.6%, up from 12.6% as
of June-end 2022
As a regional banking powerhouse, we remain focused on shaping the future, unlocking
long-term value for all stakeholders
• FAB maintains a leading position among regional banks across various MENA Investment Banking league tables in H1’23,
playing a leading role in the development of regional capital markets with the origination and execution of a number of
marquee capital market transactions
• With a global footprint spanning 20 markets across five continents, FAB’s international franchise remains a key contributor to
Group liquidity, profitability and revenue diversification, generating 20% of H1’23 Group revenue
• Continued leadership in ESG with around USD 20 billion worth of sustainable projects facilitated to date (including USD 10.7
billion in H1’23), achieving over 25% of our 2030 USD 75 billion target
• Developed market-leading solutions in key strategic areas including supply-chain finance, cash management and trading of
carbon products
• Enhanced digital capabilities and customer experience leading to over 30% increase in digital registrations and active users, a
significant increase (>160k) in new-to-bank customers year-to-date, and with further improvements in Net Promoter Score
• Shaping the future of the regional banking and payments industry through new partnerships and ecosystem builds, and the
co-investment with Brookfield Asset Management for the proposed acquisition of Network International to create a key MEA
payments platform
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT
3J
HANA AL ROSTAMANI
GROUP CHIEF EXECUTIVE OFFICER
We produced outstanding results in the first half of 2023, delivering a net profit of AED 8.1 billion and operating income of
AED 13.6 billion, the highest ever achieved by FAB in a half-year period.
The Group’s achievements demonstrate steady progress against our growth strategy and strengthen our position as the
financial institution of choice. Throughout the quarter and in the first half of this year, we have fulfilled our commitment to
delivering the best financial and banking products and services to our clients across our diversified franchise, while
empowering the UAE’s status as a global financial hub.
During the period, positive growth momentum was sustained across all business lines, while we continued to invest in
people, products, and technology to better serve our clients across our global footprint.
With its robust fundamentals, strong financial standing, and total assets surpassing AED 1.1 trillion (USD 312 billion), FAB
is among the largest and strongest financial institutions globally, with a combined credit rating of AA- or equivalent.
Moreover, the recent rating affirmations by Moody's and Standard & Poor's are a compelling testament to the Group’s
resilience through the cycles.
In building on over five decades of success, FAB remains fully aligned to Abu Dhabi and the UAE’s ambitions and is uniquely
positioned to deliver sustainable growth, enhance its competitive position and generate superior shareholder returns.
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT
4LARS KRAMER
GROUP CHIEF FINANCIAL OFFICER
FAB posted a very strong set of financial results, as evidenced by record underlying revenue and profits both in the
second quarter and in the first half of 2023. Return on Tangible Equity improved substantially to 18.6%, with solid capital
accretion lifting Group CET1 to 13.6% as of June-end 2023.
Operating income grew 44% in the first half of the year with improvements across all business lines as a result of strong
business volumes across our diversified franchise, underpinned by tailwinds from higher interest rates, and continued focus
on enhancing cross-sell. Group operating efficiency improved significantly year-on-year, with Cost-to-Income ratio at 25.2%
from 32.2% in the first half of 2022.
FAB continues to operate from a strong foundation with a unique liquidity and funding profile, and ample capacity to
continue to effectively support our clients in our home market and across our strategic footprint. In the current high interest
rate environment, we will continue to prudently manage risk, preserve a strong and resilient profile, and remain laser
focused on enhancing Group returns.
In my first few months as the Group’s CFO, I am inspired by the strength of the organisation and the opportunities that lie
ahead. Despite the persistence of macroeconomic headwinds on a global scale, FAB is very well positioned to deliver solid
results and unlock its full potential as a regional banking powerhouse.”
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT
5Q2/H1’23 SUMMARY FINANCIALS
Income statement - summary (AED Mn) Q2'23 Q1'23 QoQ % Q2'22 YoY % H1'23 H1’22 YoY %
Net interest income 4,490 4,427 1 3,390 32 8,918 6,525 37
Non-interest income 2,342 2,303 2 1,587 48 4,645 2,910 60
Operating income 6,833 6,730 2 4,977 37 13,563 9,435 44
Gain on Magnati stake sale
- - na 288 na - 3,094 na
(incl fair valuation of retained interest)
Total Income 6,833 6,730 2 5,265 30 13,563 12,529 8
Operating expenses (1,732) (1,688) 3 (1,589) 9 (3,419) (3,104) 10
Operating profit 5,101 5,043 1 3,677 39 10,144 9,425 8
Impairment charges, net (676) (798) (15) (582) 16 (1,474) (1,039) 42
Non-controlling interests and taxes (214) (315) (32) (189) 13 (529) (360) 47
Net Profit 4,211 3,929 7 2,906 45 8,140 8,026 1
Net Profit - excluding Magnati-related capital gains 4,211 3,929 7 2,617 61 8,140 4,932 65
Basic Earnings per Share (AED) 0.38 0.34 12 0.23 63 0.71 0.43 65
Balance sheet - summary (AED Bn) Jun'23 Mar'23 QoQ % Jun'22 YoY% Dec'22 Ytd%
Loans, advances & Islamic financing 483 473 2 459 5 460 5
Investments 211 209 1 186 14 206 3
Customer deposits 745 781 (5) 648 15 701 6
CASA (deposits) 333 316 6 291 14 297 12
Total assets 1,146 1,185 (3) 1,042 10 1,110 3
Equity (incl Tier 1 capital notes) 116 112 4 111 5 115 1
Tangible equity 85 81 5 80 7 84 2
Risk-weighted assets 582 568 2 595 (2) 572 2
QoQ YoY YoY
Key Ratios (%) Q2'23 Q1'23 Q2'22 H1'23 H1'22
(bps) (bps) (bps)
Net interest margin (NIM) 1.66 1.65 1 1.57 9 1.67 1.55 12
Cost-income ratio (ex-integration costs) 25.3 25.1 28 31.2 (591) 25.2 32.2 (700)
Cost of risk (bps)
55 62 (6) 52 3 58 47 11
(loans, advances & Islamic financing)
Non-performing loans ratio 3.7 3.8 (9) 3.6 15 3.7 3.6 15
Provision coverage 103 101 170 100 356 103 100 356
Liquidity coverage ratio (LCR) 159 151 764 135 large 159 135 large
Return on tangible equity (RoTE) 19.4 18.5 89 12.9 655 18.6 12.3 628
Return on risk-weighted assets (RoRWA) 2.9 2.8 14 1.8 116 2.8 1.7 115
CET1 ratio 13.6 13.2 44 12.6 99 13.6 12.6 99
Capital adequacy ratio 16.6 16.2 38 15.6 104 16.6 15.6 104
Notes:
• RoTE, RoRWA and Cost-income ratios for 2022 exclude Magnati-related capital gains in 2022
• Comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in the consolidated financial statements
• Ratios for the quarter are annualised, where applicable, except for Basic EPS
• For further details on calculation of the ratios, please see the Quarterly Series on FAB IR website’s financial reports page
• To view key figures in USD, please refer to: bankfab.com > investor relations > reports & presentations > key quarterly figures
• Rounding differences may appear in above table
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 6ECONOMIC OVERVIEW
Notwithstanding volatility in the global economic growth outlook and tightening financial conditions, GCC macroeconomic
fundamentals remained firm throughout the quarter. With regional PMIs in expansionary territory since December 2020, there
is solid evidence of economic buoyancy in non-oil sectors as economic diversification efforts continue. The weaker trend in the
oil price in the second quarter was reflective of the moves in the broader commodity complex as global growth expectations were
pared back.
In a high interest rate environment and amid global economic headwinds, the UAE and the GCC should continue to outperform
anaemic growth rates in the US and Europe. With inflation receding to 3.0% in May, UAE's real GDP is expected to moderate to
~5.0% in 2023 from an estimated high of ~7.6% in 2022.
Strong macroeconomic metrics witnessed in the region also enhance the outlook for Foreign Direct Investment (FDI) inflows,
which should continue to grow over the coming quarters. In 2022, FDI flows into the UAE rose 10% yoy to a record of USD 23
billion, attracting 60% of total FDI into the GCC, while Global FDI fell 12% in the same period.
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 7INCOME STATEMENT
Operating income (AED Mn) Q2'23 Q1'23 QoQ % Q2'22 YoY % H1'23 H1'22 YoY %
Net interest income 4,490 4,427 1 3,390 32 8,918 6,525 37
Non-interest income 2,342 2,303 2 1,587 48 4,645 2,910 60
Fees & commissions, net 765 784 (2) 699 9 1,549 1,475 5
FX and investment income, net 1,530 1,452 5 828 85 2,982 1,293 131
Other non-interest income 47 67 (30) 60 (22) 114 143 (20)
Operating income 6,833 6,730 2 4,977 37 13,563 9,435 44
• Operating income for the first half ended 30 June 2023 (H1’23) was AED 13.6 billion, up 44% yoy, driven by double-digit
growth in both net interest income and non-interest income on strong business volumes, high interest rates, strength in fee-
based businesses, and a healthy markets-related performance.
• Net Interest Income (including Islamic financing income) (NII) was AED 8.9 billion in H1’23, up 37% yoy, benefitting from
strong business volumes and rate hikes. Net Interest Margin (NIM) improved by 12bps yoy to 1.67% despite a significant
increase in cash and central bank placements.
• Non-interest income grew 60% yoy reflecting gains in our investment portfolio, a healthy sales and trading performance in
Global Markets, combined with strong client activity levels across FX, derivatives and commodities. Fees & commissions,
net (F&C) grew 5% yoy on the back of strong sales momentum in Consumer Banking, higher cash management fees and
increased trade finance activity.
• Non-interest income contribution to Group revenue increased to 34% compared to 31% in the first half of 2022, underlining
continued strategic focus on revenue diversification
• Operating expenses (Opex) were up by 10% yoy to AED 3.4 billion demonstrating continued investments in talent, systems
and transformation to drive future growth, partially offset by efficiency savings. Supported by higher income, Cost-to-
income ratio improved to 25.2% in H1’23 from 32.2% in the prior year period.
• Net impairment charges were AED 1.5 billion, up 42% yoy, translating to an annualised cost of risk (CoR) at 58bps.
Sequentially, they were lower by 15% aided by recoveries.
ASSET QUALITY
• The Group continued to present strong credit quality metrics, demonstrating a high-quality portfolio and a prudent risk approach.
• Non-Performing Loans (NPL) were AED 18.4 billion as of June-end 2023, stable qoq, implying a Group NPL ratio of 3.7%.
• Provision coverage strengthened to 103% with total ECL/ provisions2 increasing to AED 19.0 billion compared to AED 18.2 billion
at December-end 2022.
2 ECL/Provisions are defined as ECL on loans, advances and Islamic financing + ECL on unfunded exposures + IFRS9 impairment reserves
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 8BALANCE SHEET TRENDS
• Total assets grew 3% ytd and 10% year-on-year to AED 1.1 trillion (USD 312 billion) led by sizeable deposit inflows deployed across
loans and high-quality liquid assets.
• Loans, advances and Islamic financing at AED 483 billion, up 5% year-to-date as the Group continues to gain market share in
key segments.
• Customer deposits at AED 745 billion, are up 6% ytd and 15% yoy, underlining FAB’s unique role as an aggregator of regional
and international liquidity. Current Account and Savings Account (CASA) balances reached a new high of AED 333 billion,
reflecting strong performance in cash management, consistent growth in the client base and strengthened propositions.
• The Group’s liquidity position remained strong with June-end 2023 Liquidity Coverage Ratio (LCR) at 159%, comfortably in
excess of the Basel III minimum regulatory requirement of 100%.
• In the first half of 2023, FAB has raised USD 1.7 billion (equivalent) of senior wholesale funding at a competitive pricing,
successfully navigating volatile markets.
• The Group continued to focus on its Green and Sustainable-linked funding activity by issuing a USD 600 million public transaction
in Green format. FAB remains a regional and global leader in the Green Bond market with Green Bonds outstanding of over
USD 2.85 billion equivalent across 14 issuances and 5 different currencies.
EQUITY, CAPITAL & RETURNS
• Total shareholders’ equity (including Tier 1 capital notes) stood at AED 116 billion, up 1% ytd and 4% sequentially, driven by
earnings growth.
• Basel III Common Equity Tier 1 (CET1) ratio strengthened to 13.6% as compared to 12.6% at December-end 2022, improving
101bps on the back of strong earnings generation and ongoing optimisation initiatives, offsetting the increase in RWAs from
continued balance sheet growth. Capital adequacy and Tier 1 capital ratios were 16.6% and 15.5% as of June-end 2023, versus
15.6% and 14.5% respectively as of December-end 2022.
• Annualised Return on Tangible Equity (RoTE) improved to 18.6% from 12.3%1 the prior year comparative period, while
annualised Return on Risk-weighted Assets (RoRWA) stood at 2.8%. RoTE and RoRWA stood at 19.4% and 2.9% for Q2’23
versus 12.9% and 1.8% in Q2’22, respectively.
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 9BUSINESS PERFORMANCE3
AED Mn Q2'23 Q1'23 QoQ % Q2'22 YoY % H1'23 H1'22 YoY %
H1'23
Contr%
Operating income 6,833 6,730 2 4,977 37 13,563 9,435 44 100%
Operating income by business segment
Investment Banking (IB) 2,940 2,656 11 2,025 45 5,595 3,809 47 41%
Corporate & Commercial Banking (CCB) 1,774 1,682 5 1,171 52 3,457 2,183 58 25%
Consumer Banking (CB) * 1,083 801 35 967 12 1,884 1,862 1 14%
Global Private Banking (GPB) 293 275 7 246 19 568 485 17 4%
Head Office (HO) 742 1316 (44) 568 31 2,058 1096 88 15%
Operating income by geography
UAE 5,690 5,187 10 3,996 42 10,877 7,459 46 80%
International 1,142 1,543 (26) 981 16 2,686 1,976 36 20%
* excludes Magnati-related capital gains
INVESTMENT BANKING (IB)
• IB produced high double-digit revenue growth in the second quarter and first half of 2023, across various product lines,
underscoring its status as a trusted partner for government and institutional clients across all geographies.
• H1’23 operating income grew 47% yoy to a record AED 5.6 billion, contributing 41% to FAB’s Group operating income, driven
by strong revenue growth in Global Transaction Banking on the back of consistent growth in CASA balances coupled with higher
interest rates, high levels of client activity, deal pipeline execution across client segments and products including Advisory,
Equity Capital Markets (ECM) and Debt Capital Markets (DCM), as well as continued strong sales and trading performance in
Global Markets.
• Net loans grew 2% qoq and 5% ytd, while customer deposits are up 5% ytd following seasonal outflows at the tail-end of the
second quarter. CASA balances continued to expand sequentially to reach a record high of AED 160 Billion, on the back of new
client relationships, and new cash management mandates won during the period.
CORPORATE AND COMMERCIAL BANKING (CCB)
• CCB H1’23 revenue was AED 3.5 billion, up 58% yoy, contributing 25% to the Group’s total operating income, and delivering six
quarters of consecutive growth.
• This was driven by a strong performance in Global Transaction Banking, improved margins supported by higher interest rates
and strong cash management fees on the back of new mandates. This helped partially offset lower loan-related fees reflecting
stronger loan origination in the prior year period.
• Loans are up by 2% qoq and 6% ytd driven by increase in trade finance activity with FAB continuing to play a crucial role in
supporting the needs of Corporate & Commercial clients in core markets. Customer deposits are up 2% ytd with a strong
increase in CASA of AED 9 billion driven by new customer acquisitions.
3 Integration of Bank Audi Egypt into FABMisr was completed in Q4’22. FABMisr is grouped under Head Office on an interim basis, whilst product and business segmentation are
aligned to the Group norms. Figures for prior periods have been re-stated or adjusted where appropriate for comparative purposes. Please refer to IR Quarterly Series for segmental
information on a quarterly basis since beginning of 2022.
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Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 10FFAABBT(
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Q022//HH11''2233 MMAANNAAGGEEMMEENNTT DDIISSCCUUSSSSIIOONN && AANNAALLYYSSIISS RREEPPOORRTTABOUT FIRST ABU DHABI BANK (FAB)
FAB is the UAE’s largest bank with an international network that spans five continents, providing global relationships, expertise
and financial strength to support local, regional and international businesses seeking to do business at home and abroad. FAB
is consistently ranked one of the world’s largest, safest and most socially responsible banks. A global bank and regional banking
powerhouse, FAB is established in 20 markets from the Americas to Asia, and is known for consistently delivering results,
generating returns and creating value.
FAB is proactively shaping the future with purposeful action for sustainable growth. With total assets of AED 1.1 trillion (USD
312 billion) as of June-end 2023, FAB is rated Aa3/AA-/AA- by Moody’s, S&P and Fitch respectively - the strongest combined
ratings of any bank in the MENA region. FAB was named the UAE’s most valuable banking brand in the 2023 Brand Finance
UAE 50 and Brand Finance Banking 500 rankings. The Bank has been ranked by Global Finance as the Safest Bank in the UAE
and the Middle East since 2011, and #31 Safest Bank globally in 2022. The Banker’s Top 1000 World Banks 2022 rankings,
measured by Tier 1 capital, ranked FAB as #2 in the UAE, #5 in the Middle East and #90 across the globe. FAB is also a regional
sustainability leader (MSCI ESG rating of ‘A’), and a constituent of MSCI ESG Leaders and FTSE4Good EM indices.
For further information, visit: www.bankfab.com.
For investor-related queries, please contact FAB Investor Relations team on ir@bankfab.com
Download FAB Investor Relations app on iOS or Android
Find us on social media via
@FABConnects @FAB First Abu Dhabi Bank
___________________
Q2/H1'23 MANAGEMENT DISCUSSION & ANALYSIS REPORT 12fAal1l1l o,pu_4lt.1ig64.,.4iii d_
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SSoommee ooff tthhee iinnffoorrmmaattiioonn iinn tthhiiss ddooccuummeenntt mmaayy ccoonnttaaiinn pprroojjeeccttiioonnss oorr ootthheerr ffoorrwwaarrdd --llooookkiinngg ssttaatteemmeennttss rreeggaarrddiinngg ffuuttuurree eevveennttss oorr tthhee ffuuttuurree ffiinnaanncciiaall ppeerrffoorrmmaannccee ooff FFAABB.. TThheessee ffoorrwwaarrdd --llooookkiinngg
ssttaatteemmeennttss iinncclluuddee aallll mmaatttteerrss tthhaatt aarree nnoott hhiissttoorriiccaall ffaaccttss.. TThhee iinncclluussiioonn ooff ssuucchh ffoorrwwaarrdd -- llooookkiinngg iinnffoorrmmaattiioonn sshhaallll nnoott bbee rreeggaarrddeedd aass aa rreepprreesseennttaattiioonnooff FFAABB,, oorr aannyy ootthheerr ppeerrssoonn iinnvvoollvveedd iinn tthhee oobbjjeeccttiivveess
oorr ppllaannss ooff FFAABB wwiillll bbee aacchhiieevveedd.. FFAABB uunnddeerrttaakkeess nnoo oobblliiggaattiioonn ttoo ppuubblliiccllyy uuppddaattee oorr ppuubblliiccllyy rreevviissee aannyy ffoorrwwaarrdd - -llooookkiinngg ssttaatteemmeenntt,, wwhheetthheerr aass aa rreessuulltt ooff nneeww iinnffoorrmmaattiioonn,, ffuuttuurree eevveennttss oorr ootthheerrwwiissee..
0Q22//EH1 11''2233 MMAANNAAGGEEMMEENNTT DDIISSCCUUSSSSIIOONN && AANNAALLYYSSIISS RREEPPOORRTT

Sentiment: positive