Emirates NBD's net profits soared in the first quarter of the year, smashing past analysts' estimates as the recovery in Dubai's financial sector took hold.
However, the bank lost its crown as biggest lender in the country to National Bank of Abu Dhabi, which has now nudged past its Dubai-based rival in total assets.
Dubai's biggest bank, Emirates NBD reported net profits of Dh836.7m, an increase of 30.5 per cent compared to the corresponding period a year earlier, after winding down earlier provisions for bad debts incurred during the crisis. Analysts had expected earnings of Dh661m.
"While the global economic climate continues to remain uncertain, with our strong financial performance, we aim to continue building on our solid foundations to drive the bank forward while achieving our strategic objectives," said Rick Pudner, the bank's chief executive.
Emirates NBD announced this week that Mr Pudner would stand down as chief executive at the end of this year.
Meanwhile, Abu Dhabi Commercial Bank reported a 4 per cent increase in net profits compared with a year earlier to Dh829.4m. Most of the increase came through the unwinding of hedges previously made by the bank.
Both banks' stocks are at the highest level in five years.
Emirates NBD shares leapt 2.2 per cent in early trading to Dh5.10 each, having soared by 10.6 per cent on Wednesday. The bank's shares are at their highest level since November 2008.
Ahead of the release of earnings, ADCB's shares rose 3.5 per cent to Dh4.66 each, the highest since August that year.
Emirates NBD said it had repaid Dh3bn of its crisis-era funding support from the Ministry of Finance during April and was able to raise a $750m Tier 2 bond during the quarter.
In the meantime, the bank expects to complete its acquisition of BNP Paribas's retail banking operations in Egypt by May. Emirates NBD is also seeking to expand in Saudi Arabia, the United Kingdom and Singapore.
However, Emirates NBD remains the biggest bank in the UAE that has not fully repaid its crisis-era funding support from the Government.
The Ministry of Finance pumped Dh70bn into the UAE's banks through Tier 2 deposits in 2008 to shore up their capital ratios at the onset of the financial crisis. Most banks have repaid these facilities in the past few months because they are structured to become increasingly expensive to hold on banks' balance sheets over time.
ADCB said it had repaid Dh4bn of the initial Dh6.6bn from the Ministry of Finance.
Surya Subramanian, Emirates NBD's chief financial officer, said the bank held Dh9.6bn of Tier 2 capital on its balance sheet, but there were no specific targets for when that sum would be repaid.
However, Naveed Ahmed, an analyst at Kuwait's Global Investment House, said he thinks it likely that Emirates NBD will require up to a year to fully pay off these borrowings.
The profit figures were "good enough", given that operating profits stagnated, Mr Ahmed added.
"Profitability was up 31 per cent year-on-year despite the fact that operating profit before provisions flatlined [down 1 per cent year-on-year]," he said.
"The quality of earnings of the bank has improved over the previous year. ENBD has managed to rope in its operating expenses."
Emirates NBD's lending to the Dubai Government rose by 4.1 per cent to Dh78.8bn.