Written by Gérard Al-Fil

The 2024 Financial Stability Report released in early August by the UAE Central Bank stated that local banks passed several stress tests regarding their liquidity over the past year. The results showed that UAE banks maintain robust liquidity positions, supported by a stable deposit base and a well-diversified portfolio of high-quality liquid assets.

Even under severe stress conditions, banks would be able to withstand significant deposit outflows, said the report. Liquidity surpluses were estimated at 290 billion dirham (79 billion dollars) for the 30-day horizon and 241 billion dirham (65.72 billion dollars) for the 60-day horizon. According to the study, these represent sufficient buffers to ensure systemic stability.

Well-Capitalized Insurers

The lender of last resort in Abu Dhabi supervises a total of 62 financial institutions — including 24 local banks (led by First Gulf Bank in Abu Dhabi and Emirates NBD in Dubai) and 38 foreign financial institutions (such as HSBC, Citi, Deutsche Bank, or Bank Melli Iran). This figure excludes hundreds of financial firms based in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) free-trade zones. These are not overseen by the central bank but by separate regulators, which operate under internationally recognised legal frameworks.

The insurance sector of the Gulf state, a major oil supplier, also remained resilient in 2024, with total assets increasing to 144.4 billion dirham (39.37 billion dollars) — a growth of just over 10 percent. The central bank’s analysis pointed out: «The sector maintained an adequate solvency position, with a Solvency Capital Ratio of 232 percent. This improvement was driven by a moderate increase in required capital compared to the growth in available own funds.»

Governor: Growing Global Risks

Khaled Mohamed Balama, Governor of the Central Bank of the UAE, commented: «In 2024, the UAE maintained strong economic and financial conditions despite growing economic challenges and increasing global risks — supported by national economic growth as well as the robustness and resilience of the banking system.»

These risks, he added, stem from «high levels of economic and trade uncertainty and the tightening of financial and monetary policies.»

Indeed, banking circles in the Gulf are actively discussing how long the region's boom can continue. For example, the DFMGI stock index, which tracks the performance of listed companies on the Dubai Financial Market, has tripled in the past five years. For 2025, the central bank expects 4.4 percent real GDP growth, and 5.4 percent in 2026. 

Setbacks — such as during the military conflict between Iran and Israel in June — were temporary and did not stop the long-term upward trend. As yet. Real estate stocks are heavyweights on the stock exchanges in Dubai and Abu Dhabi. According to Knight Frank, housing and apartment prices in the capital rose by 17 percent in Q2 of this year. Rating agency Fitch is already warning of a moderate cooling in the UAE’s property market (total population: 11 million), as many villa and high-rise projects are set to be completed this year.