Top UAE banks’ combined H1 2023 profit hits $7.4bn

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The four biggest banks in the UAE reported a combined net profit of $7.4bn, a 71 per cent increase compared to $4.4bn for the same period a year earlier after the country’s strong economic growth helped to drive an increase in margins and net interest income.

UAE economic growth strengthened in 2022, driven by a rapid and effective Covid-19 response, supportive fiscal measures, and the benefits of business-friendly structural reforms. Moody’s said higher interest rates and increased business volumes in the country drove net interest income up 37% year-over-year (YoY).

The country’s banks continue to stand on firm financial ground and are poised to navigate through the broader macroeconomic landscape. High-interest rates and business activity, along with increasing operating costs and steady provisions, will continue to support net profits.

“We are continuing to witness sustained resilience in the UAE’s banking sector,” Asad Ahmed, Alvarez & Marsal, managing director and head of Middle East Financial Services said in a report in August. “Profitability remains robust and is emblematic of the sector’s adaptability, with non-interest income elevation and a reduction in impairment charges steering the positive trajectory.”

Here’s a look at the performance of the four biggest banks in the UAE in terms of assets that have a combined market cap of over Dhs368.4bn as of September 18, 2023.

First Abu Dhabi Bank

Net profit: Dhs8.1bn (up 65%)
Assets: Dhs1.1tn (up 10%)
Market cap: Dhs152.2bn

First Abu Dhabi Bank’s (FAB) half-year profit surged by 65 per cent year-on-year (YoY) to reach Dhs8.1bn on an underlying basis excluding the Dhs2.8bn from the sale of a stake in its payments business Magnati in the first quarter of 2022.

FAB posted an operating income of Dhs13.6bn, up 44 per cent compared to the same period last year, driven by high-interest rates, strong business volumes and improved margins coupled with strength in fee-based businesses. The banking group’s net interest income rose by 37 per cent to Dhs8.9b in H1 2023, bolstered by strong business volumes and rate hikes.

“We produced outstanding results in the first half of 2023, delivering a net profit of Dhs8.1bn and operating income of Dhs13.6bn, the highest ever achieved by FAB in a half-year period,” said Hana Al Rostamani, group CEO of FAB.

FAB’s total assets edged up 3 per cent year-to-date (YTD) and 10 per cent YoY to Dhs1.1tn, buoyed by sizeable deposit inflows deployed across loans and high-quality liquid assets.

Emirates NBD

Net profit: Dhs12.3bn (up 130%)
Assets: Dhs811bn (up 14%)
Market cap: Dhs109.6bn

Emirates NBD’s group profit soared by 130 per cent to a record Dhs12.3bn in H1 2023 from Dhs5.3bn the previous year, driven by strong current and savings account growth coupled with a healthy increase in lending.

The bank’s impairment allowances dropped 50 per cent YoY “as credit quality improved, reflecting the group’s prudent approach to credit provisions”. Quarterly, the Dubai-based lender’s income reached Dhs10.8bn while its profit rose to Dhs6.2bn reflecting the buoyant regional economy.

Emirates NBD’s total income soared by 50 per cent YoY to Dhs21.3bn compared to Dhs14.2bn the previous year as the increase in deposits and higher interest rates fed through to margins and robust growth across all business segments and products.

The banking group’s assets edged up to Dhs811bn in H1 2023, a 14 per cent increase from Dhs711bn a year earlier. Beyond the Middle East, the bank has operations in Singapore, the UK, Austria, Germany, and Russia, among others.

Abu Dhabi Commercial Bank

Net profit: Dhs3.8bn (up 25%)
Assets: Dhs521bn (up 9%)
Market cap: $65.4bn

Abu Dhabi Commercial Bank (ADCB) reported a net profit of Dhs3.8bn in the six months ended June 30, up 25 per cent from Dhs3.1bn for the same period a year earlier. For the second quarter, net profit jumped 23 per cent to Dhs1.93bn compared to Dhs1.57bn a year earlier.

ADCB’s operating income grew by 24 per cent YoY and 4 per cent quarter-on-quarter (QoQ) to Dhs8bn and Dhs4.1bn, respectively. “The bank’s strong market position and digital innovation are driving growth against a backdrop of the UAE’s robust economic fundamentals,” said Ala’a Eraiqat, group CEO of ADCB.

The Abu Dhabi-listed bank extended Dhs38nm in new credit in the first half of the year to diverse economic sectors, including government-related entities (GREs), energy, financial institutions and manufacturing.

ADCB merged with Union National Bank in May 2019 and the combined entity acquired Al Hilal Bank, into a banking behemoth with total assets of Dhs521bn as at June 30, 2023, up 5 per cent YTD and 9 per cent YoY.

Abu Dhabi wealth fund Mubadala Investment Company owns a 60.20 per cent stake in ADCB Group.

Dubai Islamic Bank

Net profit: Dhs3.1bn (up 10%)
Assets: Dhs300bn (up 4%)
Market cap: Dhs41.1bn

Dubai Islamic Bank’s (DIB) half-year profit jumped 15 per cent YoY to Dhs3.1bn compared to  Dhs2.7bn the previous year, driven by higher revenues and effective cost management measures.

The Shariah bank’s total income in the first six months of the year soared to reach Dhs9.31bn, a 49 per cent YoY increase from Dhs6.3bn the same period a year earlier, thanks to strong income from financing assets.

DIB’s net operating revenue grew by 11 per cent YoY to reach Dhs5.6bn in H1 2023 compared to Dhs5bn in the first half of 2022 while operating profit stood at Dhs4.1bn a solid 12 per cent YoY increase compared to Dhs3.7bn a year ago.

“The banking sector continues to remain resilient with rising profitability, strong and growing credit and deposit portfolio supported by the private sector, GREs as well as the retail sector,” said Mohammed Ibrahim Al Shaibani, chairman of Dubai Islamic Bank.

The banking group’s total assets rose by 4 per cent YTD to nearly Dhs300bn while its net financing and Sukuk investments reached Dhs251bn, up 5.3 per cent during the same period under review.

Read: UAE banks reap the benefits of an economic boom