The UAE Central Bank has emphasized in the Financial Stability Report the ability of the banking sector to cope with the repercussions of the outbreak of the Corona pandemic.
According to the Emirates News Agency, His Excellency Abdul Hamid Saeed, Governor of the Central Bank of the United Arab Emirates, said that the Financial Stability Report reflects the strength and resilience of the banking system in the UAE. p>
The banking system has demonstrated its ability to cope with the repercussions of the Covid-19 epidemic and support to the economy, supported by the Central Bank’s proactive initiative to launch a comprehensive targeted economic support plan, which amounted to 256 billion dirhams since Launch it, but we must remain careful and take the necessary and appropriate measures to continue supporting the country's economic growth.
According to the report, the UAE banking system concluded in 2019 in good standing with sufficient capital and liquidity in excess of regulatory requirements.
The banking system has also maintained its profitability as a result of the effectiveness and efficiency of cost management and benefiting from the gains of recent mergers in the sector.
During the first quarter of 2020, the Covid-19 epidemic changed the outlook for global and local economic activity, which posed challenges to the operating environment of the banking sector. However, our stress tests show that the banking sector in the UAE is able to withstand financial shocks of any size.
The government of the United Arab Emirates and the Central Bank have taken a wide range of measures to mitigate the negative effects of the Covid-19 epidemic, and have launched massive financial programs to help individuals, affected companies and the economy in general.
In addition, the interim measures provided by the Central Bank included guidance on the IFRS 9, and the prudential evaluation mechanism, which was designed to ensure that financial reports The precaution of financial institutions adequately reflects the operating environment in light of the Covid-19 epidemic.
According to the most recent data, total lending and deposits growth remains stable, and the country’s banking sector has a good level of liquidity and capital. The capital adequacy ratio was 16.9% in March 2020 and the qualifying liquid assets ratio was 16.6% in May 2020, thus exceeding the minimum regulatory requirements.
