02/11/2026 04:26 AST
UAE banks are sustaining earnings growth through expanding loan books, rising fee income and improved credit quality, with third-quarter disclosures shifting attention towards the cost of funding their next phase of lending.
First Abu Dhabi Bank, Emirates NBD and Abu Dhabi Commercial Bank, the three largest listed UAE lenders by market value, all reported higher nine-month earnings. Their results showed credit expansion supporting income even as the pressure on margins varied between banks.
Abu Dhabi Islamic Bank, Mashreq and Dubai Islamic Bank also reported growth in financing or revenue. Together, the October disclosures point to broader business expansion, although lower provisions, recoveries and disposal gains contributed differently to individual banks' profits.
The season's central question is increasingly how lenders finance that growth. Loans expanded faster than deposits at several major banks, making the balance between credit growth, deposit pricing and profitability a focus heading into the final quarter.
Growth beyond margins
FAB's results showed that margin pressure was not uniform across the sector. Its net interest margin improved five basis points year-on-year to 1.93%, while loans increased 10% since December, supporting a 3% rise in nine-month net profit.
Emirates NBD and ADCB demonstrated how stronger volumes and other income could support earnings despite narrower margins. Nagham Hassan, Market Analyst at eToro, identified lower margins at both lenders, as well as DIB, following rate cuts in late 2025.
Emirates NBD's income rose 15%, while ADCB's non-interest income increased 21%. At Emirates Islamic, part of Emirates NBD, operating profit rose 7%, although net profit remained broadly unchanged, showing that stronger business activity did not translate equally into bottom-line growth.
ADIB's financing expanded 25% year-on-year, while Mashreq's customer loans grew 33%. DIB reported a 7% increase in gross revenue, adding to evidence of continued business growth across conventional and Islamic banking.
These figures cover different measures and comparison periods, rather than a single sector growth rate. Most headline earnings released during October cover the first nine months of 2026, with separate third-quarter figures providing a more recent view of momentum.
Revenue diversification also helped reduce dependence on lending spreads. Non-interest income accounted for 43% of FAB's operating income and 38% at ADCB, while ADIB generated 37% of revenue from non-funded sources.
That income mix included fees and other activities, broadening the sources of earnings as banks expanded lending. The figures underline the role of business mix in explaining differences between individual lenders' results. Banks also continued investing in technology and services.
Deposits become central
"Loans grew faster than deposits at all four banks," said Hassan, referring to ADCB, Emirates NBD, Commercial Bank of Dubai and DIB. Her assessment identified funding costs as an increasingly important influence on earnings.
The later results extended that pattern to FAB, where deposits increased 5% since December against 10% loan growth. Emirates NBD's lending expanded 18% excluding its acquisition of India's RBL Bank, compared with deposit growth of 12% on the same basis.
ADCB likewise reported faster lending than deposit growth. The comparison does not establish a funding shortfall, but highlights the importance of retaining deposits and securing other funding as banks expand their balance sheets.
ADIB's current and savings accounts represented 60% of deposits, giving it a substantial base of relatively low-cost funding. Mashreq reported a corresponding share of 58%, while also raising international bond funding during the third quarter.
Further down the market-value ranking, CBD's net loans rose 8.5% since December against deposit growth of 0.7%. RAKBANK reported annual loan growth of 23% and deposit growth of 21%, with increased time deposits providing longer-term funding for lending and investments.
Credit quality supports profits
Asset quality provided support across several of the largest lenders. FAB's non-performing loan ratio fell to 2.1% from 2.6% a year earlier, while Emirates NBD's impaired loan ratio declined to 2%, despite higher provisions at DenizBank.
Hassan highlighted lower loan-loss charges at ADCB as a contributor to profit growth. ADIB's impairment charges fell 12%, while Mashreq moved from an impairment charge a year earlier to a net release, strengthening its earnings.
CBD also benefited from lower impairment losses. RAKBANK's impaired loan ratio improved to 1.7%, although its reported profit growth also included a Dh473 million gain from selling its merchant acquiring business.
National Bank of Fujairah reported lower impairment provisions, supporting higher pre-tax profit. Sharjah Islamic Bank showed a different combination: its non-performing financing ratio declined, but impairment allowances increased, illustrating that improving loan ratios do not always bring lower charges.
Ajman Bank also reported a lower non-performing financing ratio alongside increased customer financing. The results broadened the evidence of improving credit metrics beyond the largest lenders, without establishing an identical trend in provisioning across the sector.
Capital supports expansion
Capital remained another source of support for lending plans. FAB reported a common equity tier one ratio of 14%, while ADIB said its Dh1.75 billion rights issue would strengthen capital and support expansion.
The results leave banks balancing credit growth with funding costs, rather than relying on the same earnings drivers. Continued lending, fees and recoveries supported October's disclosures, while the contribution from margins and exceptional gains varied.
"The price of funding will be one of the biggest swing factors for fourth-quarter profits," Hassan said.
Gulfnews
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