Post by : Badri Ariffin

First Abu Dhabi Bank (FAB.AD), recognized as the largest bank in the UAE by assets, announced a 4% rise in its net profit for the second quarter of 2026, fueled by an increase in operating income.

The bank's net profit for the quarter ending June 30, 2026, was AED 5.72 billion (US$1.56 billion), compared to AED 5.51 billion reported during the same period last year, indicating consistent year-on-year growth in earnings.

Shares Rise Following Earnings Announcement

Following this announcement, investor sentiment was positive, with FAB's shares climbing 2.3%, contributing to a 0.4% increase in Abu Dhabi's primary stock market index during early Thursday trading.

This market response reflected the bank's robust earnings and ongoing growth in its core banking sectors.

Strong Growth in Operating and Net Interest Income

In the second quarter, FAB reported a 7% year-on-year growth in its operating income amounting to AED 10.17 billion.

Moreover, net interest income surged by 15%, playing a pivotal role in boosting the overall profitability during this quarter.

These findings underscore the bank's efficient income generation efforts over the reporting period while enhancing its financial stability.

Increase in Impairment Charges Noted Compared to Previous Year

In addition to enhanced earnings, an increase in impairment charges was also noted.

For the second quarter, net impairment charges rose to AED 950 million, up from AED 752 million recorded in the same quarter last year.

Customer Deposits and Lending Activities Exhibit Continuous Growth

During this quarter, FAB successfully expanded its balance sheet.

Customer deposits reached AED 853 billion by the end of June, marking a 5% increase from the previous year.

Simultaneously, net loans and advances grew by 16% to AED 661 billion, showcasing the bank's persistent lending expansion.

Banking Sector Faces Ongoing Regional Challenges

The continuing Iran war has significantly disrupted regional travel and supply chains.

In response, UAE authorities have enacted several economic measures, including interventions by the central bank to bolster liquidity in the banking sector.

Financial Times Report Highlights Property Sector Risks

A recent report from the Financial Times indicated that First Abu Dhabi Bank has exposure to insolvencies linked to properties associated with mortgage lender Market Financial Solutions.

This connection, while noted in the report, was not elaborated upon in FAB's quarterly earnings release.

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