UAE's Top Banks Boost Provisions Amid Iran War Outlook

The UAE’s two top banks—First Abu Dhabi (FAB) and Emirates NBD (ENBD)—each increased provisions in the first quarter of 2026 as precautionary measures following the outbreak of the Iran war on February 28, according to their Q1 earnings results released April 23, 2026. Despite higher provisions, both banks reported declining non-performing loans, though lending margins narrowed due to benchmark interest rate changes.

Bank Provisions and War-Related Caution

FAB and Emirates NBD, controlled by the Abu Dhabi and Dubai governments respectively, dominate the UAE’s banking industry with combined assets of $738 billion according to AGBI’s calculations. Before Gulf banks declared their first-quarter earnings, analysts forecast that lenders would likely take anticipatory provisions due to the probable lag effects of the war on regional economic activity and the finances of corporate and individual borrowers.

FAB booked net impairments of $300 million in the first quarter, up from $197 million a year earlier. The bank stated that nearly one-third of this amount was “in response to the evolving external environment,” alluding to war-related economic disruptions in the UAE. “Management has taken a prudent approach to provisioning across DenizBank and Emirates NBD,” Patrick Sullivan, Emirates NBD’s chief financial officer, said in a statement.

Emiratis NBD took $225 million in net impairments in the first quarter, contrasting with the prior-year period when it booked an impairment gain of $127 million as it wrote back some loans that were formerly in default.

Non-Performing Loans and Asset Growth

Despite rising impairments, both banks reported declining non-performing loans. Emirates NBD’s non-performing loan ratio fell to 2.3 percent from 3.1 percent a year earlier, and the value of impaired loans shrank by $245 million to $4.3 billion. Its gross loans rose 28 percent to $192 billion. The bank noted that first-quarter impairments related to its UAE operations; its Turkish subsidiary Denizbank accounts for 15 percent of total loans.

FAB’s non-performing loans fell year on year to $3.9 billion from $5 billion. Its non-performing loan ratio declined to a record low of 2.1 percent, down 1.2 percentage points versus the prior-year period. Its loan book expanded 22 percent to $182 billion.

Earnings and Margin Compression

The quarterly provisions weighed on earnings. FAB’s first-quarter net profit fell 2 percent year-on-year to $1.37 billion, according to AGBI calculations. Over the same period, Emirates NBD’s first-quarter net profit rose 3 percent to $1.74 billion.

Lending margins shrank, as forecast by analysts, largely due to benchmark interest rates. Emirates NBD’s quarterly net interest margin decreased 23 basis points to 3.35 percent, while FAB’s dipped 2 basis points to 1.97 percent. Both banks reported a 12 percent rise in net interest income, with FAB’s coming in at $1.53 billion and Emirates NBD’s at $2.59 billion.

Market Reaction and Shareholder Structure

The stock market showed little reaction to the duo’s results. As of 14:38 local time on April 23, Emirates NBD’s stock was up 0.5 percent and FAB’s shares were down 1.4 percent. Both banks’ share prices are up this year despite a UAE stock market sell-off in March. To Wednesday’s close, Emirates NBD’s stock had gained 6.5 percent in 2026, while FAB shares were 3.9 percent higher.

Investment Corporation of Dubai, the emirate’s sovereign wealth fund, owns a 41 percent stake in Emirates NBD. FAB’s biggest shareholders are Mubadala Investment Company and the Abu Dhabi royal family.