The United Arab Emirates’ biggest bank by assets, First Abu Dhabi Bank (FAB), posted a 4% rise in net profit in the second quarter, driven by higher operating income and a significant jump in net interest earnings.
Net profit for the first three months of the year rose to AED 5.72 billion ($1.56 billion) from AED 5.51 billion in the same period last year. Operating income grew by 7% year on year to AED 10.17 billion, and net interest income grew by 15%, driven by the bank’s continued expansion in lending volumes and its capacity to earn more income from its core business.
The performance highlights FAB’s resilience amid the challenging financial environment, geopolitical uncertainty and disruptions to regional trade and transport faced by banks in the Gulf region. The bank continued to build momentum on its balance sheet, despite these pressures, with customer deposits rising 5% to AED 853 billion at the end of June.
Net loans and advances grew by 16% compared to a year ago to reach AED 661 billion, reflecting continued demand for financing from businesses and consumers. The growth in lending supported interest income, but faster credit growth may also lead to higher provisions for possible losses.
Net impairment charges increased to AED 950 million in the quarter, compared with AED 752 million in the same period last year, FAB said. The rise was partly offset by the benefit of stronger revenue, and reflected the lender’s conservative credit risk management in an uncertain operating environment.
The results were well received by investors. The FAB rose in early Abu Dhabi trading, helping the emirate’s main stock index to rise. The market seemed to be pleased with the bank’s revenue growth, loan book growth and its ongoing capacity to generate earnings in the face of increasing impairment costs.
FAB’s results also provide a broader indication of the strength of the UAE banking sector. Economic diversification, government investment and sustained activity in trade, infrastructure, real estate and financial services have been a boon to major lenders. Banks have been able to increase credit and maintain their funding ability due to strong liquidity and deposit growth.
But external risks continue to influence the outlook. Regional tensions, supply-chain disruption and changes in global interest rates may impact loan demand, funding costs and asset quality. If interest rates fall faster than anticipated, banks could also be under pressure on margins.
The latest quarter for FAB shows that revenue growth is still the primary source of profitability. The lender was able to offset the rise in credit provisions with continued growth in loans and deposits and a rise in net interest income to achieve a year-on-year increase in earnings.
The bank’s performance will now be closely monitored for any indications that this operating momentum can be sustained in the second half of 2026. As the bank continues to expand its operations in both domestic and international markets, management’s ability to manage growth and take prudent risks will continue to be a key factor in investor confidence.
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Written by : UAE Script Staff
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