Abu Dhabi, September 17, 2024 – The Europe Today: The liquid assets of the United Arab Emirates’ banking sector have exceeded AED800 billion, reaching AED801.52 billion by the end of the second quarter of 2024, according to the latest statistics from the Central Bank of the UAE (CBUAE). This marks a significant year-on-year increase of 20.2 percent, or AED135 billion, compared to AED666.6 billion recorded at the end of Q2 2023.
The Central Bank’s Core Financial Soundness Indicators – Q2 2024 report, released today, also highlighted a quarter-on-quarter rise in liquid assets, growing by 2 percent, or AED14.9 billion, from AED786.6 billion at the end of Q1 2024. Liquid assets now account for 18.9 percent of the UAE banking sector’s total assets, valued at AED4.244 trillion at the end of Q2 2024, up slightly from 18.8 percent in the previous quarter.
The report underscored that the UAE’s banking system remains robust and well-capitalized. The total capital adequacy ratio stood at 18.3 percent at the end of Q2 2024, rising from 18 percent in Q1 2024 and 17.9 percent in Q4 2023. This figure remains well above the Central Bank’s minimum capital adequacy requirement of 13 percent, which includes a 2.5 percent capital buffer and a minimum Tier 1 capital ratio of 8.5 percent, as per the Basel III guidelines adopted by UAE banks since December 2017.
The capital adequacy ratio is a key regulatory measure to ensure that banks hold sufficient capital to cover potential losses, thus safeguarding depositors and promoting the overall stability and efficiency of the financial system. A higher ratio is indicative of the banking sector’s strong capital position relative to its risk-weighted assets.
The report further noted that the UAE banking sector’s Tier 1 Capital Ratio rose to 17 percent at the end of Q2 2024, compared to 16.7 percent in Q1 2024 and 16.6 percent in Q4 2023. Additionally, the Common Equity Tier 1 capital ratio, a critical measure of a bank’s core capital strength, increased to 15.3 percent at the end of Q2 2024, compared to 15 percent in Q1 2024 and 14.9 percent in Q4 2023.
These indicators reflect the UAE banking sector’s continued financial health and resilience, supported by prudent regulatory oversight and a strong capital framework, positioning it well to navigate future economic challenges.
