<a href="https://www.thenationalnews.com/business/banking/2023/02/01/adib-expects-its-financing-business-to-maintain-market-beating-growth-in-2023/" target="_blank">Abu Dhabi Islamic Bank</a>, the biggest Sharia-compliant lender in the emirate by assets, reported a 61 per cent annual increase in net profit for the second quarter of 2023 after revenue from funds soared on the back of rising interest rates. Net profit attributable to equity holders of the bank for the three months to the end of June climbed to Dh1.17 billion ($318.5 million), the lender <a href="https://adxservices.adx.ae/cdn/contentdownload.aspx?doc=2894170" target="_blank">said on Thursday in a filing</a> to the Abu Dhabi Securities Exchange, where its shares are traded. Revenue during the reporting period rose by 56 per cent to Dh2.2 billion. That was primarily driven by growth in funded income, up 71 per cent to Dh1.5 billion, "due to the impact of higher rates and strong finance growth", ADIB said. “Our business pipelines are healthy and asset quality is resilient," said ADIB group chief executive Nasser Al Awadhi. "Going forward, we will continue to identify new growth areas ... we see significant growth opportunities as the UAE economy continues to be strong and resilient." The country's economy, which rebounded strongly last year from the slowdown caused by Covid-19, has carried the growth momentum forward into 2023. The resurgence has come on the back of higher oil prices and government measures to mitigate the impact of the pandemic. The Arab world’s second-largest economy grew by <a href="https://www.thenationalnews.com/business/economy/2022/12/20/uae-economy-set-to-grow-76-this-year-highest-in-more-than-a-decade/">7.9 per cent in 2022</a>, the most in 11 years. It is expected to expand by 3.3 per cent this year and 4.3 per cent in 2024, according to <a href="https://www.thenationalnews.com/business/economy/2023/06/22/uae-central-bank-raises-non-oil-economic-growth-forecast-for-2023-on-tourism-boost/">UAE Central Bank data</a>. The <a href="https://www.thenationalnews.com/business/banking/2023/05/16/uae-central-bank-imposes-sanctions-on-eight-lenders-over-compliance-failures/">banking sector</a> in the UAE is well capitalised with adequate liquidity buffers and remained resilient against the risk of stagflation and market uncertainties in a stress-testing exercise, <a href="https://www.thenationalnews.com/business/banking/2023/07/14/uae-banking-sector-remains-well-capitalised-and-resilient-to-market-volatility-cbuae-says/" target="_blank">the Central Bank said earlier this month.</a> With economic momentum continuing and <a href="https://www.thenationalnews.com/business/banking/2023/03/23/gulf-central-banks-raise-interest-rates-as-fed-stays-course/">interest rates</a> still on the rise, the <a href="https://www.thenationalnews.com/business/banking/2023/01/26/first-abu-dhabi-banks-2022-net-profit-jumps-to-record-on-interest-income-boost/">profitability </a>of the four largest banks in the Emirates is set to grow further this year, Moody's Investors Service said in March. Banks in the UAE, like their peers in the GCC, are beneficiaries of higher interest rates amid relatively lower inflation in the region. Most central banks in the six-member GCC economic bloc peg their currencies to the US dollar and <a href="https://www.thenationalnews.com/business/economy/2023/07/27/gulf-central-banks-raise-interest-rates-as-fed-benchmark-hits-22-year-high/">follow the US Federal Reserve</a>'s interest rate moves. The Fed has aggressively increased its benchmark rates over the past several quarters to bring <a href="https://www.thenationalnews.com/tags/inflation/">inflation</a> down to a 2 per cent target range in the world's largest economy. On Wednesday, the US regulator increased its <a href="https://www.thenationalnews.com/business/economy/2023/07/27/gulf-central-banks-raise-interest-rates-as-fed-benchmark-hits-22-year-high/">policy rate by 0.25 percentage points</a>, pushing it to the highest level in 22 years. It is expected to raise the rates at least one more time this year. Despite the positive growth momentum, ADIB "cannot ignore that global economic uncertainties remain, and that there are concerns about the pressures of a rising rate environment on major segments of the UAE economy", Mr Al Awadhi said. "We will, therefore, maintain our conservative approach to balancing the risk and reward of new credit extension while simultaneously building our capital.” ADIB’s net profit for the first six months of the year jumped 55 per cent on an annual basis to Dh2.23 billion. Revenue for the reporting period climbed by 50 per cent to Dh4.3 billion, driven by "excellent income diversification mix and strong growth across all business segments and products". Funded income at the end of June grew 75 per cent to Dh2.9 billion on higher volumes and better margins. Non-funded income for period grew 14 per cent to reach Dh1.3 billion, driven by a 15 per cent rise in fees and commissions. “ADIB reported a record performance in the first half of 2023," said ADIB chairman Jawaan Al Khaili. The record revenue during the period "equates to an average return on equity of 25 per cent reflecting the success of the group’s diversified business model and a healthy regional economy", he said. "Our ability to deliver strong business momentum is the result of our solid capital position, prudent risk management, diversified business lines and nimble execution of our strategy underpinned by an on-going digital and innovation strategy," Mr Al Khaili added. ADIB's total assets reached Dh182.2 billion at the end of June, a 28 per cent rise on an annual basis, driven mainly by a growth in net financing, rise in cash and balances with central bank as well as an increase in the bank's investment’s portfolio. Gross customer financing increased 18 per cent to Dh115.1 billion. Customer deposits for the period amounted to Dh150 billion, up 31 per cent year on year.