The UAE Central Bank confirmed that the financial system remained flexible and stable throughout the year despite the challenges faced by the world and that the banking sector remains well capitalized and has sufficient reserve liquidity.
This was based on the “Financial Stability Report” issued by the Central Bank of the United Arab Emirates. The report included a comprehensive assessment of the stability of the financial system.
The report highlights that the financial system remained flexible and stable throughout the year despite the challenges facing the world and that the banking sector remains well capitalized and has ample liquidity buffers.
The report includes local and global macro-financial conditions, local asset markets, results of assessment of the banking system, non-banking financial institutions, financial infrastructure, a set of tools that the Central Bank uses in fulfilling its macro-prudential responsibilities, as well as an analysis of other important achievements, such as digitalization and sustainability of the financial sector, embodying its ongoing key role in enhancing competitiveness and supporting the sustainability of the national economy.
The report found that stimulating local conditions helped shield the UAE’s financial system from the impact of adverse global trends, while maintaining risk levels within safe limits and unchanged from the previous year.
The report indicated that the country’s real GDP growth accelerated during the year thanks to a strong recovery in non-oil GDP and a significant increase in oil GDP, while global economic growth slowed during the year. 2022, when external risks remain high, with rising inflation prevailing, tightening financial conditions and ongoing geopolitical tensions.
The report notes to what extent the UAE’s banking system has benefited from the country’s macroeconomic recovery in 2022, as credit has grown, especially private sector lending, while banking sector profitability has exceeded pre-pandemic levels due to high interest margins and low impairment provisions. .
A pressure test conducted by the Central Bank to measure the ability of state-owned banks to withstand the risks of inflation accompanied by a hypothetical economic recession and market uncertainty shows that the banking sector has sufficient capital and liquidity to withstand a sharply negative hypothetical scenario and continue to support the economy while maintaining credit supply for borrowers in the country.
The report sheds light on the development of the non-banking financial institutions sectors in 2022… and indicates that the insurance sector in the country has remained resilient in terms of precautionary measures and has demonstrated strong business growth, exceeding the total volume of registered insurance claims. pre-pandemic premiums.
The financial sector has maintained its resilience despite a growing decline in business volume, while the exchange sector continued to make profits in addition to a recovery driven by non-oil business activities.
In the area of payment systems, the report indicated that payment systems run by the Central Bank were just as efficient in 2022, resulting in an increase in the volume and cost of transactions, fueled by economic growth and continuous digitalization efforts.
Source: VAM