UAE Banking Sector is Well-Funded with Adequate Liquidity Buffers


The Central Bank of the UAE (CBUAE) noted that the UAE's financial system shown outstanding resilience throughout 2022. The banking industry in the UAE maintained strong capitalization and substantial liquidity buffers despite confronting global headwinds, which helped to ensure the system's unwavering stability. The paper emphasizes how crucially important favorable domestic circumstances were in protecting the UAE's banking sector from unfavorable global economic trends. As a result, the system's risks remained under control, keeping within reasonable bounds, and showing little variation from the previous year.

“The UAE Financial Stability Report 2022 demonstrates the best practices followed by the CBUAE in maintaining a stable, sustainable and resilient financial sector that is able to manage potential risks,” said Khaled Mohamed Balama, Governor of the CBUAE. “These efforts are in line with our vision of becoming among the world’s leading central banks in promoting monetary and financial stability and is in support of enhancing the competitiveness of the financial sector as part of the UAE’s strategic objectives.”

The report's findings include the faster rise of the UAE's real GDP in 2022. A significant rise of the oil GDP and a strong rebound of the non-oil GDP both contributed to this growth. The global economic slowdown, increasing geopolitical tensions, heightened inflation, tightening financial conditions, and persisting external dangers make these favorable outcomes all the more significant.

The local macroeconomic recovery in 2022 had a significant positive impact on the financial system in the UAE. Throughout the year, credit growth, particularly in private sector loans, saw a significant resurgence. Additionally, the banking industry's profitability was higher than it was before to the pandemic, mostly due to higher interest margins and fewer impairment costs.

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