The banking sector in the United Arab Emirates (UAE) has shown signs of continued financial strength, with the combined capital and reserves of its banks reaching AED 476. 6 billion (USD 129. 8 billion) by the end of March 2024. This figure represents a year-on-year increase of 10. 7%, or AED 45. 9 billion, compared to AED 430. 7 billion in March 2023, according to data released by the Central Bank of the UAE (CBUAE).
This growth in capital reserves reflects the overall health and stability of the UAE banking system. Capital adequacy ratios, which measure a bank's ability to absorb financial losses, remain well above regulatory requirements. This strong financial position allows UAE banks to support economic activity by lending to businesses and individuals.
The growth in capital reserves wasn't uniform across all bank types. National banks, which account for the majority of the UAE's banking sector, saw their capital and reserves increase by 14. 6% year-on-year to AED 433. 7 billion at the end of March 2024. This indicates continued confidence in domestic lenders.
Foreign banks operating in the UAE also experienced positive growth, albeit at a slightly slower pace. Their capital and reserves reached AED 68. 9 billion by the end of March 2024, reflecting a 13. 7% increase compared to the previous year. This suggests that the UAE remains an attractive destination for foreign banks seeking to expand their reach in the region.
Geographically, the growth in capital reserves was distributed across the emirates. Banks operating in Dubai, the UAE's commercial hub, saw their capital and reserves reach AED 235. 2 billion at the end of March 2024, representing a year-on-year increase of 12. 9%. Banks in Abu Dhabi, the capital emirate, also witnessed growth, with their capital and reserves reaching AED 204 billion by the end of the quarter, reflecting a 7. 5% increase compared to March 2023.
The continued growth in capital reserves strengthens the UAE's position as a regional financial center. This strong financial base positions the banking sector to play a key role in supporting the country's economic diversification plans and fostering future growth.