Ahli United Bank (AUB) posted a 37.6 per cent rise in fourth-quarter net attributable profit on Sunday as Bahrain's largest lender benefited from higher fee income and strong lending.

Net attributable profit for the three months to December 31 rose to $106.2 million from $77.2 million a year earlier.

Investment bank SICO Bahrain had forecast the bank, which has operations in the Middle East and North Africa as well as the United Kingdom, would make a net profit of $109.3 million.

Driving the increase was a 20.3 per cent increase in fee income, which rose to $166.5 million from $138.4 million, according to Reuters calculations.

This helped offset a dip in net interest income, which fell 2.1 percent to $184.6 million.

For the full year, the bank made a profit of $482.5 million, down from $579.4 million in 2013.

Stripped of a $212.9 million one-off gain in 2013 from a stake sale, annual profit gained 31.7 per cent last year.

AUB's total loans stood at $18.5 billion to the end of December, up 6.7 percent. Its ratio of non-performing loans fell to 2 percent from 2.3 percent a year earlier.

Stronger asset quality is enabling Gulf banks to set aside less cash to cover bad loans after the global financial crisis triggered a spate of debt troubles in the region.

The bank's board proposed a cash dividend of $0.045 and a 5 percent stock dividend for 2014, the same as for 2013. - Reuters