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Pandemic resulted in banks’ higher impairment charges, lower operating income and reduced profitability
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The report demonstrates that the UAE banking sector remains resilient, with sustained lending capacity
The Central Bank of the UAE (CBUAE) expects the UAE GDP to grow by 2.4 percent in 2021 and 3.8 percent in 2022 and the non-oil GDP to expand by around 4 percent in both years.
The bank projects that the UAE economy will gradually recover from the repercussions of the COVID-19 pandemic during 2021 and 2022.
The 2020 Financial Stability Report (FSR) published by the bank on Saturday features key solvency and liquidity indicators that demonstrate the resiliency of the UAE’s financial system amid the COVID-19 pandemic.
The report gives a comprehensive overview of the development of the UAE economy and financial system in 2020.
.As per CBUAE’s findings, the Targeted Economic Support Scheme has been effective in mitigating the risks posed by the pandemic by ensuring a continued flow of credit and helping individuals and companies affected by the repercussion of COVID-19 to overcome temporary debt repayment difficulties.
During 2020, the CBUAE closely monitored the developments in the banking sector, especially asset quality and the growth of lending.
The FSR demonstrates that the UAE banking sector remains resilient, with sustained lending capacity.
The effects of the pandemic resulted in banks’ higher impairment charges, lower operating income and reduced profitability. The aggregate capital and liquidity buffers remain well above the regulatory requirements.
Commenting on the findings of the report, Khaled Mohamed Balama, Governor of the Central Bank of the UAE, said that the CBUAE has worked tirelessly to ensure that vital sectors of the nation’s economy are able to withstand this pandemic.
“CBUAE’s introduction of the Targeted Economic Support Scheme came at the right time, ensuring that banks could mitigate funding and liquidity pressures and maintain their lending capacity, resulting in the provision of necessary aid to individuals and corporates alike,” he said.
“Our support is ongoing as most support measures provided by CBUAE will remain in place through 2021”.
