United Arab Bank posts robust profit rise

Earnings per share increased to AED 0.18, reflecting the stronger bottom line and steady capital position. The board also proposed a dividend distribution, signalling confidence in the lender’s financial health and future prospects.

The lender’s results underscore a broader trend across the banking sector in the United Arab Emirates, where higher interest rates over the past two years have supported margins, while credit growth and improving asset quality have reinforced profitability. United Arab Bank, headquartered in Sharjah and listed on the Abu Dhabi Securities Exchange, has been rebuilding momentum following a period of restructuring earlier in the decade.

According to its financial disclosures, the growth in net profit was supported by a rise in net interest income, driven by an expanded loan book and a stable cost of funds. Non-interest income, including fees and commissions, also contributed, reflecting increased transactional activity and improved cross-selling to corporate and retail customers.

Total assets grew during the year, underpinned by growth in customer financing and investments. Deposits remained stable, with a continued focus on building a diversified funding base. Management said that the bank maintained prudent provisioning levels, with credit costs contained as asset quality metrics showed resilience despite global economic uncertainties.

The chief executive stated that the results demonstrated the bank’s “clear strategic direction and disciplined execution”, highlighting a focus on core banking activities, risk management and digital transformation. He noted that strengthening the balance sheet and enhancing operational efficiency had been priorities, alongside expanding services to small and medium-sized enterprises and retail customers.

Return on equity improved in line with profit growth, supported by tighter cost controls and a more efficient allocation of capital. Analysts tracking the sector have pointed to the benefits of higher benchmark interest rates in the region, as banks were able to reprice assets more quickly than liabilities, widening net interest margins.

However, executives also acknowledged that the operating environment remains competitive. With interest rate cycles expected to shift, banks are preparing for potential margin compression if rates ease. For United Arab Bank, maintaining disciplined underwriting standards and continuing to diversify revenue streams will be central to sustaining profitability.

The proposed dividend, subject to shareholder approval at the annual general meeting, marks a continuation of the bank’s commitment to rewarding investors while retaining sufficient capital to support growth. The payout ratio reflects a balance between shareholder returns and regulatory capital requirements set by the Central Bank of the United Arab Emirates.

Sector data show that banks across Abu Dhabi and Dubai have reported solid earnings growth over the past financial year, supported by resilient economic activity, infrastructure spending and growth in non-oil sectors. Lenders have also benefited from lower impairment charges compared with earlier periods when pandemic-related provisions weighed on results.

United Arab Bank’s capital adequacy ratio remained comfortably above regulatory thresholds, providing a buffer against potential volatility. Liquidity indicators were also reported to be strong, with a stable funding profile and access to wholesale markets if required.

The bank has continued investing in digital platforms, aiming to enhance customer experience and streamline internal processes. Management indicated that technology upgrades and automation have contributed to improved cost efficiency and faster service delivery. Expanding digital onboarding and mobile banking services has been part of efforts to attract younger customers and deepen relationships with existing clients.

While the profit surge reflects favourable market conditions, the leadership cautioned that global economic headwinds, including geopolitical tensions and fluctuations in commodity prices, could influence credit demand and risk appetite. The bank said it remains vigilant in monitoring portfolio quality and sectoral exposures.

Corporate lending remained a significant contributor to income, particularly in trade, manufacturing and services. Retail banking also showed steady growth, supported by mortgage lending and personal finance products. The institution has sought to balance its exposure across sectors to mitigate concentration risk.

Market observers note that smaller lenders such as United Arab Bank have been sharpening their competitive positioning through targeted growth strategies rather than aggressive expansion. By focusing on niche segments and strengthening risk frameworks, these banks aim to deliver sustainable returns without compromising asset quality.

Share performance on the Abu Dhabi Securities Exchange reflected cautious optimism, with investors weighing the improved earnings against broader market trends. Banking stocks in the region have been sensitive to shifts in global monetary policy expectations and oil price movements.