The five largest banks in the United Arab Emirates recorded a combined net profit of 38.1 billion dirhams (approximately $10.37 billion) for the first half of 2026, marking a year-on-year increase of 7.8% as reported in a recent Moody’s analysis.
The group includes First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank and Mashreq. The five UAE banks hold 79% of the UAE banking system’s assets (Moody’s).
This increase in profits can be attributed to robust operating revenues that successfully outpaced rising costs and significant provisioning requirements.
Fitch’s March Report
Fitch Ratings reported in March that financial institutions in the Gulf Cooperation Council region are experiencing limited short-term credit risk due to the ongoing conflict in Iran, bolstered by strong financial reserves and governmental support.
Moody’s attributed the net profit growth to solid operating revenues, characterised by an increase in net interest income, sustained fee and commission growth, with strong treasury and trading revenues.
Each variable collectively outweighed higher operational expenses and increased provisioning charges.
Strong Operating Revenues & Fee Commissions
Operating revenues were particularly strong, with net interest income rising by 11% YoY to reach 46.8 billion dirhams. This growth was primarily driven by an 18% increase in average interest-earning assets, supported by ongoing lending demand within the UAE and regional markets.
This occurred despite a reduction in asset yields, which fell to 6.1% from 6.8% due to interest rate cuts executed by the Central Bank of the UAE (FY25). The narrowing of net interest margins was modest, decreasing from 2.8% to 2.6%.
Non-interest income also exhibited strong performance, surging 12% to 26 billion dirhams. Fee and commission income grew by 18%, driven by increased activity in trade finance, cards, wealth management and transaction banking.
Treasury and trading revenues benefited from heightened market volatility linked to geopolitical tensions, which enhanced activity in foreign-exchange, derivatives, and capital markets. Non-interest income now constitutes over 35% of total operating income, reflecting a continued move away from traditional earnings models based on interest spreads.
Moody’s Forecast
Moody’s projects that profitability will remain strong throughout 2026, bolstered by ongoing loan growth tied to a prolonged capital expenditure cycle.
While net interest margins are expected to show resilience, non-interest income may experience moderation due to softer trade and deal flows.
Cost efficiency among these banks is anticipated to remain among the highest globally, although credit costs will likely remain elevated as banks preemptively increase provisions in anticipation of asset quality deterioration stemming from the continuing conflict.
While earnings are expected to continue their upward trajectory, profitability ratios may trend downwards into year-end.
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