The UAE’s banking sector has recorded a significant rise in its liquid assets, surpassing AED800 billion by the end of the second quarter of 2024. This data comes from the latest Central Bank of the UAE (CBUAE) statistics, indicating continued financial growth.
The exact value of these liquid assets reached AED801.52 billion by the close of Q2 2024, marking a 20.2% increase compared to the AED666.6 billion registered during the same period in 2023. This amounts to a surge of AED135 billion over the past year, as stated in the Central Bank’s newly issued Core Financial Soundness Indicators – Q2 2024 report.
Furthermore, on a quarterly basis, the liquid assets grew by 2%, increasing by AED14.9 billion from AED786.6 billion at the end of Q1 2024.
The Central Bank also highlighted that these liquid assets represent 18.9% of the banking sector’s total assets, valued at AED4.244 trillion by the end of Q2 2024. This is a slight rise from the 18.8% share recorded at the end of the first quarter of 2024.
In terms of capitalization, the banking system remains robust. The overall capital adequacy ratio stood at 18.3% by the end of Q2 2024, reflecting an improvement from 18% in Q1 2024 and 17.9% in Q4 2023.
According to the report, “The capital adequacy ratio remains significantly above the required minimum of 13%, which includes a 2.5% capital buffer and a minimum Tier 1 capital ratio of 8.5%,” as stipulated by the CBUAE’s regulations in line with Basel III guidelines implemented since December 2017.
Capital adequacy ratios are crucial in ensuring that banks maintain enough capital to cover their risk-weighted assets. Strong capital ratios play a key role in safeguarding depositors and enhancing the stability of the financial system.
The report further detailed that the Tier 1 Capital Ratio rose to 17% at the end of Q2 2024, compared to 16.7% in Q1 2024 and 16.6% at the end of Q4 2023. The Common Equity Tier 1 capital ratio also improved to 15.3%, up from 15% in Q1 2024 and 14.9% at the close of Q4 2023.
These indicators demonstrate the strength and resilience of the UAE banking sector, ensuring financial stability in the face of global challenges.
