UAE Banking Sector Continues Growth Trajectory in 2024

The UAE banking sector continued its growth momentum last year and is poised for further growth and recovery in 2024, thanks to the success of the Central Bank of the UAE's (CBUAE) strategies and policies in setting the necessary frameworks and regulations to deliver sustainable growth for the sector, and its commitment to promoting economic and financial stability in the UAE.

During the past year, CBUAE succeeded in maintaining a stable and efficient banking and financial system by providing efficient and effective central banking services. It also made record levels of growth in assets, credit, deposits and investments, and maintained strong levels of capital efficiency, provisions and reserves, to ensure compliance with the highest standards of governance, transparency and risk management.

The banking sector has been able to confirm its strength and flexibility in dealing with all global geopolitical and economic challenges and changes. The indicators of rising assets, financing and capital adequacy ratios reflect the sector's flexibility and resilience to adapt to the changes the world is witnessing, as well as its ability to continue its role in providing the appropriate conditions to achieve economic and social development goals, while ensuring compliance with international standards in governance and risk management.

Bank Assets

In the fourth quarter of 2023, UAE banks' total assets increased by 3.1% (q-o-q), reaching AED 4.075 trillion, marking an 11.1% (y-o-y) increase from December 2022. Gross credit rose by 0.5% (q-o-q) to AED 1.992 trillion, with an annual increase of 6.0%. Total deposits grew by 4.2% (q-o-q) and 13.5% (y-o-y) to AED 2.522 trillion. Aggregate Capital and Reserves increased by 5.2% (q-o-q) to AED 488.7 billion. The Total Capital Adequacy Ratio stood at 17.9%, surpassing regulatory requirements. This data was reported in the 4th Quarter Report of 2023 by the CBUAE.

Foreign Assets of the Central Bank

By the fourth quarter of 2023, the UAE Central Bank's foreign assets surged by 16.7% (q-o-q), reaching AED 681.2 billion, fueled by increases in current account balances, deposits with foreign banks, and foreign securities. Money Supply M1 rose by 4.2% (q-o-q) and 12.4% (y-o-y), hitting AED 829.3 billion. Money Supply M2 grew by 6.0% (q-o-q) and 18.8% (y-o-y), reaching AED 2,023.4 billion. Money Supply M3 increased by 4.0% (q-o-q) and 16.0% (y-o-y), amounting to AED 2,445.2 billion by December 2023. These monetary developments were outlined in the Central Bank's 4th Quarter Report of 2023.

Liquid Assets

Liquid assets in the UAE banking sector surged to AED 742 billion by the fourth quarter of last year, marking a 29% y-o-y increase (AED 165.7 billion) from 2022's fourth quarter. Quarter-on-quarter, it rose by 9.6% (AED 64.7 billion) from the third quarter of 2023. This rise indicates banks' ability to meet short-term obligations, fostering financial stability and confidence. The Tier1 Capital Adequacy Ratio reached 16.6%, up from 16.2% in 2022's fourth quarter. Additionally, the Common Equity Tier 1 Capital Ratio increased to 14.9% from 14.4% over the same period.

News Source: Emirates News Agency