The Central Bank of the United Arab Emirates (CBUAE) highlighted the persistent credit appetite of the private sector, evident in the strong demand growth for loans that were coupled with financial institutions’ increased willingness to lend in the first quarter of this year.
The continued growth in credit demand was supported by a positive outlook on the domestic economy, which so far offsets the adverse impact of rising interest rates on loan demand during the quarter, according to the Q1-23 CBUAE Credit Sentiment Survey, which added that the overall UAE banking system remained well capitalised.
“The capital adequacy ratios improved further in Q1 2023 compared to the same period last year, reaching 17.8%. The liquidity and funding positions of the UAE banking system remained robust in Q1 2023, supported by strong deposit growth. Consequently, the improved liquidity and funding ratios reflected ample bank credit capacity. The UAE banking system asset quality indicators improved in Q1 2023. The Net NPL ratio moderated from the peak reached during the pandemic to 2.9% in Q1 2023, reflecting both an increase in credit growth and a reduction in the stock of non-performing loans.”
The Abu Dhabi Securities Exchange (ADX) average share price index increased by 4.0% Y-o-Y in Q1 2023 and the market capitalisation reached AED2.59 trillion in March 2023, according to CBUAE's figures.
The Dubai Financial Market (DFM) average share price index rose by 0.6% Y-o-Y in the first quarter of 2023 and the market capitalisation reached AED589.0 billion in March 2023.
News Source: Emirates News Agency