Today's Edition
ABU DHABI (WAM)
The Credit Default Swaps (CDS) for the government of Abu Dhabi fell from 44 bps in December 2023 to 40 bps in March 2024.
According to the Central Bank of the UAE (CBUAE) Quarterly Economic Review June 2024, the Abu Dhabi CDS level continues to remain very low, a testament to its dynamic economy, strong fiscal position and large sovereign wealth funds. Abu Dhabi continues to have one of the lowest CDS premiums in the Middle East and Africa region. Dubai’s CDS also fell from 71 bps in Q4 2023 to 65 bps in March 2024.
The CBUAE said that the UAE banking sector maintained sufficient capital levels on aggregate, with overall capital adequacy ratios remaining well above the regulatory requirements. The Capital Adequacy Ratio reached 18.0 percent and the CET-1 ratio (Common Equity Tier 1 Ratio) improved to 15.0 per cent, both increasing by 0.2 percentage points compared to a year ago.
The UAE banking system’s double-digit deposit growth continued contributing to ample liquidity and funding buffers. The liquidity and funding ratios continued to improve with the Liquidity Coverage Ratio and Net Stable Funding Ratio at 157.7 per cent and 113.6 per cent, respectively.
The UAE banking system's asset quality ratio improved marginally, contributed by a decrease in the stock of non-performing loans. The Net NPL ratio (Net Non-Performing Loans Ratio) moderated to 2.3 per cent and the NPL ratio to 5.6 per cent in the first quarter of 2024. The total provision coverage ratio increased to 94.9 per cent and the specific provision coverage ratio to 60.8 per cent.
The combined lending portfolio of the UAE banking system grew by 8 per cent year-over-year (YoY) at the end of the second quarter of this year, driven mainly by domestic credit, reflecting the expansion of loans to individuals and private sector companies. Domestic credit to individuals grew across key sub-categories including mortgages, personal loans and auto loans, while domestic credit to individuals grew by 8 per cent YoY at the end of the second quarter.
