First Abu Dhabi (FAB) Report

First Abu Dhabi (FAB) Report

            First Abu Dhabi (FAB) was formed following a merger involving the national bank of Abu Dhabi and the first gulf bank in 2016. Following the merger, the bank became one of the leading financial institutions in the region of the Middle East. The First Gulf Bank (FGB) in terms of asset worth came third in the United Arab Emirates (UAE). In 2014, it had a shareholder’s equity of about AED 34.1 billion. It was also rated A+ by capital intelligence in 2014. On the other hand, the National Bank of Abu Dhabi (NBAD), was ranked as the leading lender in the UAE. It also led the banking industry in terms of market capitalization in the UAE with branches in approximately 17 countries.  The merger of the two banks to form FAB came to unlock their full potential and thus maximize the value of their shareholders. The share value of the banks involved rose following talks on their merger (Oxford Analytica, 2019). The bank has a strong global presence through its various subsidiaries and representatives’ outlets, online portals, ATMs, and branches in America, Europe, Asia-Pacific, Middle East, and Africa. It has a headquarter in Abu Dhabi.

Source: (Narayanan & Nair, 2019)

The share value of First Abu Dhabi Bank has grown since 2010 when it was about 13.90 December and in 2019 where it was 15.10 in December 2019.

Source: (Bloomberg, 2019)

Leadership in FAB Organization in UAE

Leadership is a critical factor in every organization. It is a key determiner of the success of an organization.  FAB is one of the organizations that have strong leadership based on the principles of good governance. The executives in the bank are led by Abdul Hamid Saeed who is the chief executive officer. He is deputized by Andre Sayegh. The Group chief financial officer is James Burdett while the group chief operating officer is Zulfiqar Ali Suleiman. The bank has other executive and non-executive directors who have played a big role in its success. The bank leadership is based on the client led model. It provides market-oriented products that resonate very well with the various regions that make its market. The leadership of the bank has also focused on the global market thus increasing its market share and international network.

Internal Analysis

FAB is one of the competitive banks in the UAE. It is led by competitive managers who have steered it to success by making strategic decisions that have made it stand out from most of the banks in the region. It offers various products that are suitable to each and every market where it operates thus meeting the local needs of its customers. For example, it provides Islamic finance in most of its outlets thus meeting the needs of most of the clients in the UAE who are Muslims. However, most of its operations are based in the MENA region thus presenting a market concentration risk (Dhaliwal, Judd, Serfling & Shaikh, 2016). The UAE is one of global financial hubs, and the bank offers special banking solutions to the global community. It has an international market network that eases trade worldwide. Some of its flagship products and services include brokerage services, property management, real estate, private banking, credit cards, debit cards, global transactions, insurance, investment banking, Islamic finance, loans and deposits (First Abu Dhabi Bank, 2019). Its banking standards are globally designed to meet the needs of its local and international clients. The local products are projected to the international market thus widening its clientele base and segments

External Environment

The bank has managed to stand out among its competitors such as Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Commercial bank of Dubai PSC, Emirates NBD Bank, and Union National Bank among others. The bank operates in approximately 19 countries outside of UAE thus making it convenient in global transactions. The bank has a strong global presence through its various subsidiaries and representatives’ outlets, online portals, ATMs, and branches in America, Europe, Asia-Pacific, Middle East, and Africa. Having branches in the various countries and regions has increased its revenue and as well as reduced its economic risk. It has branches in strategic locations such as London in the United Kingdom, Hong Kong, Shanghai, Kuala Lumpur, among other places. The many branches provide new opportunities and its product are diversified for each region (First Abu Dhabi Bank, 2019).  Being a player in the global market, it is able to bench market itself against the leading global banks and gain some insights.

Performance and Strategy Used in FAB Leader in Market, Financial and Operation

FAB has made use of various strategies to remain successful in the market. The strategies involve providing financial products that meet the needs of local people who form their clientele. Since it has many branches in various regions, the products and services offered are customized to each and every region (First Abu Dhabi Bank, 2019). It has most of its branches in the UAE where it also has it headquarter.

Over a period of five years since FAB was formed, its share value has appreciated. This is a clear indication of the positive effects of the merger between the banks and the good perception by investors globally as well a good performance.

The bank’s strategies are founded on global market insights. The insights are developed from geopolitical and macroeconomic developments due to its strong global presence. It is present in 5 continents (FAB, 2019). Research and development also play a great role in product and services development and improvement.

From the bank’s income statement, its revenues, net income have been increasing annually for the last three years. The total assets as  well have been growing and it has a good debt to assets ratio of 18.26% as in 2019 showing that it is in a sound financial position (Bloomberg, 2019). The cashflow has been fluctuating owing to its immense investment activities especially in 2017. After the investments, its operating and financing cashflow started to grow in 2018 indicating that it was in a position to meets its short term debts.

Source: (Bloomberg, 2019)

Bibliography

Bloomberg. 2019. Bloomberg. Retrieved from https://www.bloomberg.com/quote/FAB:UH

Dhaliwal, D., Judd, J.S., Serfling, M. and Shaikh, S. 2016. Customer concentration risk    and the cost of equity capital. Journal of Accounting and Economics, 61(1),           pp.23-48.

FAB. 2019. Annual Report 2018. Retrieved from https://www.bankfab.com/en-ae/about-fab/investor-relations/reports-and-presentations/annual-report-2018?view=1

First Abu Dhabi Bank. 2019. Corporate & Investment Banking. Retrieved from https://www.bankfab.com/en-ae/cib

Narayanan, A., and Nair, D. 2019. Abu Dhabi Considers a Merger to Create Top Mideast Lender. Retrieved from https://www.bloomberg.com/news/articles/2019-04-03/abu-dhabi-said-to-weigh-merging-abu-dhabi-islamic-bank-with-fab

Oxford Analytica. 2019. UAE bank’s ownership proposal sparks investor interest.             Emerald Expert Briefings, (oxan-es).