RAKBank's income rose by more than expected on higher fees on currency transfers, cross-selling of insurance and wealth management products, as the bank reaped higher returns on market investments.
The Ras Al Khaimah-based lender reported net profits of Dh392.1 million for the second quarter, an increase of 14.1 per cent compared with the corresponding period a year earlier.
The bank beat earnings estimates from one analyst, who had anticipated profits of Dh359m for the second quarter.
The bank's shares, which hit an all-time high this year, rose 4.5 per cent in trading on Thursday but did not trade yesterday after the release of earnings.
"RAKBank's rise in profit in the first half of 2013 is a result of both funded and non-funded income streams fuelled by a competitive pricing policy, innovative products and industry-leading customer service," said Graham Honeybill, the bank's chief executive, who is expected to retire this year.
The bank, which fell victim to a US$5m cyberfraud late last year, reported sluggish growth in lending and deposits after its loan book contracted in the first quarter.
Net loans and advances rose 1.1 per cent during the quarter to Dh20.2 billion, although its newly established Islamic subsidiary generated Dh648.3m in new assets since the beginning of this year.
Deposits grew 2.7 per cent during the quarter to Dh20.7bn.
RAKBank's income from market investments more than doubled in the second quarter to Dh48.5m, up from Dh18.9m last year.
The bank said income from fees and commissions grew 8.8 per cent to Dh135.9m for the second quarter, driven by loan origination fees, Bancassurance commission and fees from wealth management products and foreign exchange.
Banks have been pushed to diversify income from consumer finance following a Central Bank circular that took effect in 2011 regulating retail banking fees on personal lending, credit cards and car loans.
The UAE's big banks are expected to report earnings showing the volume of problem debts built up during the financial crisis has decreased, allowing them to dip into reserves built up as a buffer against defaulted payments, said Tariq Qaqish, a fund manager at Al Mal Capital.
"We expect to see strong results for Q2 as NPLs [non-performing loans] showing signs of easing," he said.
"In addition, we see provision recovery might be the trend going forward."
Emirates NBD, National Bank of Abu Dhabi and Abu Dhabi Islamic Bank are all due to report this week.