United Arab Bank's (UAB) earnings swelled as its loan book grew by the most in two years.
The Sharjah-based lender, which expects by January to have doubled its branch network compared with two years ago, reported net profits for the first half of Dh260 million.
The results are equivalent to net profits of Dh139.8m for the second quarter, an increase of 18.2 per cent. "Strong growth has been generated by each of our business units," said Paul Trowbridge, the bank's chief executive.
"Loans and advances, customer deposits and total assets have all more than doubled in the last two years. With our expanding branch network and customer-centric approach, we are well positioned to continue on our current trajectory."
It is the first UAE lender to report earnings for the second quarter, which is expected to generate significant profit growth for the Emirates' biggest financial firms. UAB, which avoided the wave of bad debts that hobbled rivals following Dubai's property crash, has been able in the meantime to capitalise on the weaknesses of other players in the sector despite a difficult mortgage market.
The bank's loans grew by 13.3 per cent during the quarter to Dh13.25 billion, the fastest rate of growth since the third quarter of 2011.
During April and May, banks across the UAE's financial system increased lending by just 0.4 per cent to Dh1.13 trillion, according to the Central Bank. Lending data for June is yet to be released.
UAB also raked in large quantities of deposits, which rose 11.2 per cent during the second quarter to Dh12.4bn.
The bank, which is 40 per cent owned by Commercial Bank of Qatar, has targeted rapid growth of its loan book by undercutting rates offered by big international lenders on mortgages.
Levels of outstanding mortgages have fallen across the sector during each of the past three quarters to March this year, which Independent Finance, a mortgage adviser, attributes to high levels of remortgaging at cheaper rates and large numbers of cash buyers of distressed properties clearing existing mortgage stock. However, UAB's rapid expansion may be more moderate in the months ahead. In an interview with The National last month, Mr Trowbridge said the bank would aim to "consolidate" its growth during the next few quarters and be more selective about its lending.
"We don't necessarily need to go for growth in the next couple of years," he said.
So far this year, the bank's shares are up 64.2 per cent to Dh5.06 each, outperforming gains on the Abu Dhabi Securities Exchange General Index and also the ADX Banks Index which has gained 48.3 per cent during the same period.
National Bank of Abu Dhabi and Emirates NBD are expected to be among the best performing banks this quarter. Analysts estimate each lender will generate profit growth of 23 per cent during the period.
Elsewhere, Qatar Islamic Bank reported a dip in net profits for the second quarter. Net profits fell 2.9 per cent to 339m riyals compared with the corresponding period a year earlier. The Doha-based lender attributed the earnings to high investment income offset by lower financing income and fees due to margin compression.