The UAE’s five largest banking institutions—FAB, Emirates NBD, ADCB, DIB, and Mashreq—recorded a combined net profit of Dh38.1 billion in the first half of 2026, marking a 7.8% year-on-year increase. While this growth highlights the resilience of the nation’s financial sector, a report from Moody’s Ratings points to cooling momentum as banks navigate a complex landscape. The institutions successfully leveraged robust net interest income and a 12% rise in non-interest revenue to boost their bottom lines. However, these gains were partially dampened by a significant 60% surge in loan loss provisioning, as lenders adopted a conservative outlook in response to regional geopolitical instability and rising operating costs related to digital transformation and AI investments.

Despite the pressure on profitability, the banks’ fundamental performance remains stable, with total assets growing by 14% to reach Dh4.35 trillion. While net interest margins compressed slightly due to central bank rate cuts, the impact was largely offset by an 18% expansion in interest-earning assets, particularly within projects linked to the UAE’s strategic investment agenda. Looking ahead, while profitability is expected to remain healthy, analysts anticipate more selective lending practices and continued high credit costs. Banks are moving to front-load provisions in anticipation of potential future volatility, signaling a shift toward cautious growth as the year progresses.