UAE banking system can withstand shocks of any scale, CBUAE says – The National

UAE banking system can withstand shocks of any scale, CBUAE says – The National

The banking sector in the UAE is well capitalised and can withstand macro-financial shock of any scale despite the coronavirus pandemic challenges, according to the Central Bank of the UAE.

"Our stress tests demonstrate that the UAE banking sector is able to withstand macro-financial shocks of any size," the regulator said on Tuesday, despite the change in economic outlook globally and locally in the first quarter of the year as a result of the Covid-19 pandemic.

UAE banks are in a "resilient position“, with liquidity buffers well above regulatory requirements. UAE lenders remained profitable due to the "effectiveness and improved cost efficiency“, benefitting from recent mergers in the sector, the CBUAE said, citing its Financial Stability Report.

Based on the most recent data, the aggregate lending and deposit growth remain stable and the banking sector in the country, the second-biggest Arab economy, holds good level of liquidity and capital.

The capital adequacy ratio of 16.9 per cent as of end March 2020 and the eligible liquid asset ratio of 16.6 per cent as of end May 2020, are well in excess of the minimum regulatory requirements, the regulator said.

"The Financial Stability Report demonstrates a robust and resilient banking system in the UAE,“ Abdulhamid Saeed,