First Abu Dhabi Bank - Q1 2026 Earnings Analysis

Performance Highlights

First Abu Dhabi Bank reported Q1 2026 operating income of AED 9.34bn, a 6% year-on-year beat driven by net interest income growth of 12%, while net profit of AED 5.01bn declined 2% year-on-year due to AED 300mn in management overlays, with underlying earnings up 3% on the same basis. Total assets crossed USD 400bn for the first time, rising 14% year-on-year to AED 1.49tn, underscoring the scale of the franchise heading into the balance of 2026.

Net interest margin held at 1.95%, up 20 basis points quarter-on-quarter as disciplined balance sheet and treasury management offset a modest 2 basis point year-on-year compression, while gross loans expanded 8% year-to-date to AED 685bn and customer deposits grew 4% to AED 871bn. Non-interest income of AED 3.72bn fell 2% year-on-year amid softer markets, though fee and commission income rose 21% year-on-year to AED 1.46bn, and the cost-to-income ratio improved sequentially to 22.6%.

Management Outlook and Forward Catalysts

Management reaffirmed full-year guidance for low-to-mid-teens loan growth, cost of risk below 70 basis points, RoTE above 16%, and provision coverage above 90%, while flagging that the 2026 macro outlook will be formally reassessed in the first half given downward revisions to oil price assumptions and UAE real GDP growth. The CET1 ratio of 12.8% sits below the greater-than-13.5% pre-dividend target, with RWAs expanding 7% quarter-to-date to AED 790bn following the redemption of a USD 750mn AT1 instrument in March.

Bulls will focus on the structural strength of NII momentum, the all-time-low NPL ratio of 2.1%, and AI-enabled efficiency gains already delivering up to 20% productivity improvements across select processes. Bears will monitor the elevated downside scenario weighting of 50% in ECL models, the sensitivity of net profit to a 25 basis point rate cut estimated at approximately AED 200mn, and whether management overlays normalise or deepen as geopolitical conditions evolve through mid-2026.