The UAE’s banking sector continues to show growth and resilience as the capital and reserves of banks operating in the country reached Dh495.2 billion at the end of June 2024, representing a 10.6% increase compared to the previous year. According to the Central Bank of the UAE (CBUAE), this growth is attributed to a monthly increase of 1.5% and a first-half increase of 1.2% in 2024.
The CBUAE clarified that the capital and reserves of banks do not include subordinated borrowings/deposits but do incorporate the profits earned within the current year. National banks contributed significantly to the total capital and reserves, accounting for 86.3% with a value of Dh427.5 billion. Foreign banks also played a role, representing 13.7% of the total capital and reserves with a value of Dh67.7 billion.
Furthermore, the statistics released by the Central Bank revealed that the investments of banks operating in the UAE exceeded Dh680 billion at the end of June, marking a record high. Investments increased by 18.4% year-on-year, reaching Dh680.2 billion compared to Dh574.3 billion in June 2023. On a monthly basis, investments saw a 1.07% increase, while the first half of the year witnessed a 7.1% rise, indicating a positive trend in the sector.
Bonds held to maturity made up the largest share of banks’ investments at 48.8% with Dh332.2 billion, showing a month-on-month increase of 0.1% and a year-on-year increase of 26.2%. Investments in securities representing third-party debt accounted for 41.1% of total investments with Dh279.6 billion at the end of June, registering a 2% monthly increase and a 12.5% year-on-year increase.
Additionally, banks’ investments in equities reached Dh16.7 billion in June, reflecting a 38% year-on-year increase and a 1.8% monthly increase. Other investments by banks amounted to 51.7% with a 2.2% monthly increase and a 2.6% year-on-year increase. It is important to note that banks’ investments do not include deposits with the Central Bank in the form of Certificates of Deposit and Monetary Bills.
In conclusion, the UAE’s banking sector is showing robust growth and stability, with an increase in capital and reserves as well as investments. The strong performance of national and foreign banks in the country is a positive indicator of the overall financial health of the sector. The record-high investments in various asset classes further reflect confidence in the market and bode well for the future of the banking industry in the UAE. The continued growth and diversification of investments underscore the resilience and adaptability of the banking sector in the face of economic challenges.
