Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Leading UAE banks posted robust loan growth and strong second-quarter profits in 2025, capitalising on a lower interest rate environment across the Gulf, according to a report by S&P Global Market Intelligence.
The favourable monetary conditions helped stimulate lending across the GCC, but UAE lenders, particularly First Abu Dhabi Bank (FAB) and Emirates NBD, stood out for their growth momentum and upgraded full-year guidance.
FAB, the country’s largest bank by assets, reported a 10.71% year-on-year increase in loan growth, accelerating from 6.34% in the same period last year. The performance prompted FAB to upgrade its full-year loan growth guidance to the low double-digit range, from an earlier single-digit outlook. The bank also posted a record net profit of $1.50 billion in the second quarter, marking a 29% jump from $1.16 billion a year ago.
Emirates NBD, another top-tier UAE bank, reported even higher loan growth at 14.28%, also revising its full-year guidance upward to the low double digits. Its net interest income (NII) grew 6% year-on-year to $2.28 billion. However, the bank’s net interest margin (NIM) narrowed by 22 basis points to 3.36%, largely due to pressure from its Turkish subsidiary, DenizBank. A $31 million impairment charge dragged Emirates NBD’s quarterly profit down by 10% compared to a year earlier, when the bank had posted a reversal of $374 million in provisions.
The positive loan growth trend was mirrored across other Gulf markets, with Saudi Arabia’s Al Rajhi Bank reporting the sharpest year-on-year rise among major regional lenders. Al Rajhi’s loan book expanded by 19.31%, up from 7.37% a year earlier. The bank also posted a 25% jump in NII to $1.95 billion, supporting a 31% rise in net profit to $1.64 billion for the quarter.
Qatar National Bank (QNB) posted 9.38% loan growth and revised its full-year loan guidance to 7%–9%, up from 5%–7%. Almost half the growth stemmed from Turkey, according to Durraiz Khan, senior vice president for group financial consolidation. QNB’s NII rose to $2.34 billion, up from $2.12 billion a year ago, although margin pressures persisted due to high rates in Turkey. Khan noted that a projected rate cut in Turkey could aid NIM recovery in the second half of the year.
Saudi National Bank also recorded solid loan growth, rising to 12.21% from 10.25% in the prior-year quarter.
Other UAE-based banks, such as Abu Dhabi Commercial Bank (ADCB) and Dubai Islamic Bank (DIB), also saw steady growth. ADCB reported high single-digit loan growth and continued to expand its retail and SME lending book. DIB maintained its strong performance in corporate and Islamic finance segments, benefitting from improved liquidity and lower funding costs.
S&P analysts said they expect loan growth momentum to continue in the UAE, Saudi Arabia, and Qatar, supported by anticipated US Federal Reserve rate cuts later in the year, which Gulf central banks are expected to follow. As rates soften further, banks in the region—particularly those with diversified portfolios and strong funding bases—are poised to benefit from increased credit demand and margin stabilisation.
