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UAE banks’ Q2 profits surge on rising interest income

Bank, Abu Dhabi Wam
Abu Dhabi Commercial Bank extended AED38 billion of new credit in the first half of 2023

Two major Abu Dhabi-listed banks – Abu Dhabi Commercial Bank and First Abu Dhabi Bank – reported robust bottom lines for Q2 2023, as interest and non-interest incomes surged.

Abu Dhabi Commercial Bank (ADCB) reported a 23 percent year-on-year rise in the second quarter of 2023 profit due to healthy loan growth and rising benchmark rates.

The bank’s net profit was reported as AED1.93 billion ($517.37 million) in Q2 2023, compared to AED1.58 billion a year earlier, as loans and advances rose 12 percent year-on-year.

“While successfully maintaining credit growth, we have retained a prudent approach to lending and continued to diversify our asset portfolio,” Deepak Khullar, ADCB’s group chief financial officer, said in a statement to the bourse.

Net interest income rose 14 percent year on year to AED2.9 billion, while non-interest income grew 22 percent to AED1.13 billion in the second quarter.

“The bank’s strong market position and digital innovation are driving growth against a backdrop of the UAE’s robust economic fundamentals,” said group CEO Ala’a Eraiqat.

Impairments in the second quarter stood at AED748 million, unchanged from the previous quarter. However, it rose 14 percent compared to the same period in 2022.

Impairments in the first half of 2023 jumped 57 percent year on year.

ADCB’s net profit for the first half of 2023 rose 25 percent year-on-year to AED3.8 billion, while interest income rose 23 percent year-on-year to AED5.78 billion.

The bank extended AED38 billion new credit in H1 2023.

Separately, First Abu Dhabi Bank’s second-quarter profit rose 61 percent yearly to AED4.2 billion ($1.14 billion).

Operating income increased 37 percent year on year to AED6.8 billion. On the other hand, net impairment charges reached AED676 million, down 15 percent quarter on quarter.

The bank’s first half of 2023 net profit rose 65 percent year on year to AED8.1 billion, the highest ever achieved by the group in a half-year period. Growth was driven by sustained momentum across all business lines, continued strength in fee-based businesses, and higher market-related income.

Loans, advances and Islamic financing rose five percent year-to-date to AED483 billion, as the group continued to gain market share in key segments.

Customer deposits stood at AED745 billion, up six percent year-to-date, with current account and savings account balances reaching a new high of AED333 billion, indicating strong cash management performance and client base growth.