The UAE banking sector maintained its position as the largest in the Arab world with the combined assets of all banks growing 6.5 per cent to Dh2.87 trillion in 2018 as the amount of credit extended grew five per cent to Dh1.66 trillion, according to the UAE Banks Federation.
"As the sector embraces new initiatives and developments, and with increased regulation and compliance requirements, prospects for 2019 and beyond appear promising," UBF said in a statement on Wednesday.
In its annual report, the UBF shed light on the its significant progress and achievements of the UAE banking sector. While the total UAE bank deposits increased eight per cent to Dh1.76 trillion last year, deposits of residents grew seven per cent to Dh1.54 trillion as government deposits surged 16 per cent to Dh290 billion. Deposits from government-related entities increased eight per cent to Dh207 billion, while private sector growth went up by one per cent to Dh1.01 trillion, said the report.
In the first seven months of 2019, UAE banks' saving account balances hit a record of circa Dh165.8 billion during the first seven months of the year, a nine per cent growth of Dh13.8 billion against Dh152 billion by the end of 2018, according to statistics revealed by the UAE Central Bank.
The savings accounts for 11.4 per cent of the total deposits held by the UAE banks which amounted to Dh1.446 trillion by the end of July 2019. Savings in UAE dirham comprised over 60 per cent of the total savings which stood at around Dh140.7 billion by the end of July against Dh25.1 billion in foreign currency, according to CBUAE's statistics.
The month of May saw the highest growth in savings, Dh8.4 billion, with first quarter witnessing an increase of Dh4 billion. The UAE national banks claimed the lion's share of savings - Dh149.6 billion by the end of July - Dh131.27 billion of which in dirham and the rest in foreign currency. Savings held by UAE-based foreign banks reached Dh16.3 billion since the beginning of the year until July.
The report also shows that the soundness of the banking sector remained positive in 2018. Furthermore, banks operating in the UAE remained well-capitalised, with the capital adequacy ratio (CAR) reaching 17.5 per cent, while CAR for Tier 1 capital reached 16.2 per cent and Common Equity Tier 1 (CET1) stood at 14.3 per cent at the end of 2018, which is well above the regulatory requirements set by the Central Bank of the UAE and Basel III.
Abdulaziz Al Ghurair, chairman of UAE Banks Federation, describing 2018 as "a productive year" for both the UAE Banks Federation and the UAE, said the UAE banking and financial sector has maintained its robustness and high performance with a strong and diversified national economy, a safe and stable political and economic climate at the national level, and the optimal use of financial and human resources.
"As a result of escalating trade tensions and the impediments such tensions may create, trade volumes between developed countries may witness a slowdown. In the event of such a slowdown, oil prices may follow a downward trend following their 2018 highs, which would in turn lead to deceleration in Mena oil exporters' growth," said the UBF said.
The report shows that UBF has undertaken and advanced various initiatives over the last year, including Tasharuk (cybersecurity platform), Courts Banking Accreditation, and its Emiratisation agenda. "And in spite of regional and global uncertainty, the report also highlights that the UAE banking and financial sector has once again proven its resilience and potentiality. Growing deposits, coupled with sufficient liquidity and increased demand for credit, enabled banks to increase lending," said the report.