Bank shareholders are to be rewarded with almost Dh8 billion (US$2.17bn) in dividend payouts as lenders look set to eclipse last year's total.
Six of the UAE's biggest lenders have reported dividend payouts worth Dh7.8bn, and with several big banks still to report earnings, that figure could yet rise.
An analysis of last year's dividend payouts show that the entire banking sector paid Dh8.08bn last year, putting lenders on track to exceed that sum this year.
"It's been way beyond expectations," said Talal Touqan, the head of research at AlRamz Securities. "Profitability has got higher and higher as provisions are being reversed."
Current dividend yields on local stocks, running at 6 to 7 per cent, were significantly higher than returns on offer on cash, bonds or many developed market equities, making the region look "extremely lucrative, within the region and internationally," Mr Touqan added.
Yesterday, First Gulf Bank (FGB) announced a Dh2.5bn shareholder payout as its international operations supported a rise in revenues.
One of the biggest banks in the capital, FGB generated net income of Dh1.1bn in the fourth quarter of last year, an increase of 12 per cent compared with the same period a year earlier.
FGB said it had recommended a cash dividend of 83 fils per share, equivalent to a payout of Dh2.5bn. The bank's full-year earnings of Dh4.1bn were 12 per cent higher than in 2011 and beat estimates of Dh4bn.
UAE banks are under close scrutiny for signs of stability after the crisis of the past few years, but lending growth in the Emirates has remained weak for many lenders.
FGB had sought to diversify its sources of revenue geographically and across different business sectors, paying off in stronger earnings throughout the year, said Andre Sayegh, FGB's chief executive.
"FGB has been successful in building a powerhouse of diversified and stable revenue generating businesses, while our overseas presence will gain an important momentum going forward," he said.
ADCB reported full-year profits of Dh2.8bn, a decline of 8 per cent from 2011 when earnings were boosted by the sale of a 25 per cent stake in RHB Capital Berhad, a Malaysian lender, to Aabar Investments.
The bank's loan book shrank by 1 per cent to Dh123.1bn, while deposits were flat on a year-on-year basis at Dh109.2bn.
ADCB boosted its dividend by 5 percentage points to 25 fils per share despite the lower earnings, having returned its first payment to shareholders since the global financial crisis last year. The bank announced a 10 per cent share buyback this week, which would cost it Dh1.9bn.
Yesterday, Emirates NBD said it would pay a 25 fils per share dividend, increasing its dividend by a similar amount from last year. The bank is due to report full-year earnings today.
If approved, both banks' dividend payouts will amount to about Dh1.4bn.
The banks' increased payouts come as UAE banks seek to reward investors with generous dividend payments. Last week, Commercial Bank of Dubai announced a Dh611.5 million dividend payout, equal to two thirds of earnings, while RAKBank has reported a cash dividend of Dh609.5m.
FGB's profit boost was driven by a 9 per cent increase in lending, almost three times the UAE sector-wide average, by diversifying away from the Emirates towards emerging markets.
Revenues from the bank's branches in Singapore, India, Qatar and Libya more than doubled to Dh307m.
The pace of expansion had allowed FGB to retain its high dividend payments, said Abdulhamid Saeed, the bank's managing director.