The UAE’s banking sector hits a record-high stockpile of liquid assets by the end of Q2 2024. The latest report by the Central Bank of the UAE (CBUAE) revealed that the UAE has accumulated more than AED800 billion in liquid assets.
The value of liquid assets recorded was AED801.52 billion at the end of Q2 2024, a year-on-year (YoY) increase of 20.2%, or AED135 billion, compared to AED666.6 billion at the end of Q2-23, the Central Bank said in its Core Financial Soundness Indicators—Q2 2024 report, issued today.
According to the report, the value of liquid assets in the UAE banking sector increased quarter-on-quarter (QoQ) by 2%, or AED14.9 billion, compared to AED786.6 billion at the end of Q1-2024. The bank said in its report that the value of liquid assets in the banking sector accounted for 18.9% of the banking sector’s total assets of AED4.244 billion at the end of Q2 2024, up from 18.8% at the end of Q1 2024.
The bank noted that the UAE banking system is well capitalized, with a total capital adequacy ratio of 18.3% at the end of Q2 2024, up from 18% at the end of Q1 2024 and 17.9% at the end of Q4 2023.
The report further explored that the capital adequacy ratio remains well above the minimum capital adequacy ratio of 13%, which includes a capital buffer of 2.5% and a minimum Tier 1 capital ratio of 8.5%, as stipulated in the Central Bank’s regulations based on compliance with the Basel III Capital Guidelines, which banks in the UAE have been following since December 2017. Regulatory capital ratios measure the amount of a bank’s capital expressed as a percentage of risk-weighted assets. A high capital adequacy ratio protects depositors and promotes the stability and efficiency of the economy’s financial system.
According to the Core Financial Soundness Indicators report, the banking sector’s Tier 1 capital ratio reached 17% at the end of Q2 2024. Additionally, statistics from the report indicated that the Common Equity Tier 1 capital ratio rose to 15.3% at the end of Q2 2024, compared to 15% at the end of Q1 2024 and 14.9% at the end of Q4 2023.
-WAM
