Any lingering worries of a decline in bank profits were soundly dismissed in mid-July, with the release of another batch of results. Banks in the UAE and Bahrain reported continued profit growth, backed by fee and interest income.

In the UAE, where banks' exposure to falling stock markets has been a particular concern, First Gulf Bank recorded first- half profits of AED 747 million ($203 million), up 61 per cent on the same period last year.

Profits at Commercial Bank of Dubai totalled AED 283 million ($77 million), up by 1 per cent, while they were up by almost 20 per cent to AED 67.8 million ($18.4 million) at United Arab Bank.

Sharia-compliant institutions followed suit. Abu Dhabi Islamic Bank increased first-half net income by 106 per cent to AED 291 million ($79 million), Dubai Islamic Bank announced an increase in profits to AED 707 million ($192 million), up 56 per cent, and Sharjah Islamic Bank reported profits of AED 91 million ($24.7 million).

Elsewhere, Gulf International Bank posted first-half profits of $131 million, up 16 per cent on the same period in 2005. Profits were up 21 per cent at Bank of Bahrain & Kuwait to
BD 16 million ($42.4 million) and Bahrain Islamic Bank reported net income of BD 8 million ($21 million) for the first six months of the year, an increase of 94 per cent on the corresponding period in 2005.