Featured Product

    CBUAE Assesses Stability of Financial System in UAE

    July 07, 2020

    CBUAE published the financial stability report, which assesses the resilience of the financial system and identifies issues in the banking and financial system that require additional support. The report presents a comprehensive assessment of the macro-financial conditions and the banking system in the country, including stress testing, regulatory developments, and other aspects relevant to financial stability. The report also includes valuable contributions and assessments of trends and developments in the payment systems, capital markets, and insurance sector.

    According to the report, the UAE banking system remained resilient in 2019, with the ability to withstand the challenging operating environment, as demonstrated by the regulatory stress tests. Capital ratios and liquidity buffers of banks remained adequate and well above the regulatory requirements. The capital adequacy ratio was 16.9% as of the end of March 2020 and the eligible liquid asset ratio was 16.6% as of the end of May 2020. The banking system remained profitable, with improved cost efficiency benefiting from efficiency gains related to recent mergers in the sector. Asset quality, however, represented a challenge with an increase in non-performing loans ratio, although partially mitigated by good provisioning levels. During the year, bank lending continued to grow at a steady rate, although its distribution was not broad-based. Retail lending registered a decline, while credit to certain sectors such as real estate and construction continued to grow, supported by improved affordability due to declining real estate prices.

    International exposures of the UAE banking system increased during 2019 underpinned by cross-border acquisitions and diversification in terms of foreign debt securities. The finance companies sector recorded a decline in total assets with profitability and cost-efficiency remaining under pressure in a challenging operating environment. Overall liquidity and capital ratios of the finance companies sector remained adequate and specific provision levels improved, with some notable differences between individual finance companies. The size of the finance companies sector represented only about one percent of the banking system. The year also marked concerted efforts from CBUAE including enhancement of regulatory frameworks regarding corporate governance, anti-money laundering, and the continued implementation of the Basel III capital adequacy standards with further focus on financial technology and cyber risks. The UAE payment systems remained resilient and continued to operate without any major disruptions. 

    Looking ahead, the COVID-19 pandemic has radically changed the outlook for global and domestic activity in 2020 and brought volatility into the financial markets. However, stress tests demonstrate that the UAE banking sector is able to withstand macro-financial shocks of any size. The UAE government and CBUAE have taken a wide range of measures to mitigate the adverse impact of COVID-19 pandemic and launched substantial financial programs to help affected individuals and corporates and the economy at large. In addition, the temporary measures introduced by CBUAE include the IFRS 9 guidance, postponement of the implementation of remaining Basel III standards and regulatory stress testing to ease the operational burden on the banks, and prudential filters to neutralize the effects of increased provisioning on capital base of banks. This financial stability report focuses on developments during 2019; therefore, the consequences of the COVID-19 pandemic for the banking system are not visible in this report.

     

    Related Links

    Keywords: Middle East and Africa, UAE, Banking, Financial Stability Report, Regulatory Capital, Basel, Stress Testing, Credit Risk, IFRS 9, COVID-19, Fintech, Cyber Risk, CBUAE

    Featured Experts
    Related Articles
    News

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.

    March 04, 2021 WebPage Regulatory News
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    News

    EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models

    EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.

    March 01, 2021 WebPage Regulatory News
    News

    SRB Publishes Overview of Resolution Tools Available in Banking Union

    SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.

    March 01, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6655