Earning Through a War: UAE Lenders Bank Records in a Quarter of Conflict

UAE lenders posted record first-half profits through a quarter of regional war, Hormuz shipping disruption and rate uncertainty. At bank level, the numbers point to Gulf banking earnings decoupling from oil and conflict, and to capital beginning to flow out to South Asia. One strong half is still one half, and the second will test it.

Photo: VOLKAN SORKUN / Pexels

The most useful stress tests are the ones nobody designs. The second quarter of 2026 handed banks in the United Arab Emirates (UAE) a live one: a regional war in its fifth month, disrupted shipping through the Strait of Hormuz, and no settled view on where rates go next. Then the results season closed in late July with a verdict few risk committees would have modelled in January. The country’s leading lenders banked records through it. No oil windfall did the work.

Records Built on Lending, Deposits and Fees

Emirates NBD, Dubai’s largest bank, reported a record first-half profit before tax of Dh16.2 billion ($4.41 billion) on 23 July, up 5 per cent on a year earlier, on total income up 16 per cent to Dh27.9 billion, according to its results release. Second-quarter net profit of Dh6.4 billion came in ahead of analyst estimates, Zawya reported the same day, and the balance sheet passed Dh1.3 trillion for the first time. For a bank whose home market sits a few hundred kilometres from the quarter’s missile exchanges, what stands out is how conventionally the record was earned: lending, deposits and fees.

Abu Dhabi Commercial Bank (ADCB) went further. Profit before tax rose 26 per cent in the second quarter, to a record Dh3.83 billion, on the bank’s own results release of 23 July, its twentieth consecutive quarter of profit growth. The bank’s impairment charges fell 55 per cent, taking the cost of risk to 36 basis points from 88 a year earlier. Ala’a Eraiqat, ADCB’s group chief executive, said the quarter “reflects the strength of our franchise and the resilience of the UAE economy”. That fall in impairments deserves scrutiny. It gets it below.

The National Bank of Ras Al Khaimah (RAKBank) completed the set. Its second-quarter profit rose 5.4 per cent to Dh702.3 million, according to The National’s 23 July round-up, and first-half profit after tax reached a record Dh1.7 billion, up 25 per cent, Gulf News reported from the bank’s release of the same date. Being the most retail-weighted of the three, RAKBank carries a separate signal: household and small-business demand held through the war months, extending the consumer-credit deepening CFI.co has tracked in the UAE.

A Third Engine, and It Runs Through India

Three engines drove the half at Emirates NBD, and none of them is oil. Lending did most of the work: the loan book expanded by Dh114 billion in the first half, taking gross lending to Dh771 billion, per the results release. Fees supplied the rest, with non-funded income up 25 per cent, a cushion against rate uncertainty that margin-dependent banks lack. The third engine is new. On 18 June the bank completed a $2.75 billion investment in India’s RBL Bank, a capital infusion that left it holding 60 per cent of the expanded share capital and which the two banks describe as the largest foreign direct investment yet made in Indian banking.

A Gulf lender built on oil-era deposits is now a net exporter of banking capital to South Asia. That is diversification made measurable.

Beyond the Banks’ Own Accounts, the Same Picture

An International Monetary Fund (IMF) mission led by Said Bakhache visited the UAE from 7 to 16 July and found banking liquidity tightened since the conflict began but still ample, with deposits and lending continuing to expand; it also credited prompt policy action, so the state provided a stable backdrop and stopped well short of a rescue. CFI.co examined that assessment this month. What makes the IMF’s judgment useful is its scope: the resilience sits in the sector’s funding base, beyond any single franchise.

Discount the Half Before Banking It

Now the caveats, and they are real. One strong half is not a cycle. RAKBank’s record includes a Dh473 million one-off gain from the sale of its merchant-acquiring business, Gulf News noted on 23 July; strip that out and the growth is respectable, no more than that. ADCB’s 55 per cent fall in impairment charges is a tailwind that cannot repeat indefinitely, and credit losses habitually lag conflicts. Squeezed by June’s shipping and insurance costs, a borrower defaults in December, not July. Consolidating a fast-growing Indian bank also flatters the acquirer’s loan and income growth, and proves nothing about underlying momentum.

The Giants Grew, but Only Just

The early out-of-sample tests are in, and they qualify the story without breaking it. Start with the region’s biggest balance sheets. First Abu Dhabi Bank, Abu Dhabi’s biggest lender, reported second-quarter profit of Dh5.72 billion, up 4 per cent and ahead of estimates, though first-half profit rose just 1 per cent, per Zawya and The National on 23 July. Qatar National Bank reported first-half profit up 3.2 per cent to QR8.67 billion on 8 July. Growth of 1 to 4 per cent at that scale is resilience, not acceleration. Watch the remaining Qatari and Saudi prints through early August for the same split: records at the diversified UAE franchises, flatter lines elsewhere.

Two Quarters of Impairment Charges

A banking sector that earns record profits through a war, funds itself from domestic deposits and deploys surplus capital into India has done something Gulf diversification plans have promised for two decades. Everything in that sentence describes large UAE lenders with deep local funding and diversified fee income, and nothing in it describes smaller Gulf systems, banks leveraged to regional trade flows, or any lender once credit costs normalise. Investors have already stopped asking whether UAE bank earnings can survive a shock; what they want to know is whether the second half prices the lag. One line in the accounts will answer them. Impairment charges for the third and fourth quarters, rising across the sector, would make this half the top of a mini-cycle and the decoupling a matter of timing.

Sources

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