UAE Central Bank’s support package approaches $1.7bn

Loan deferrals under the UAE Central Bank’s support package launched in response to the Iran conflict have reached $1.68 billion (6.2 billion dirhams). 

More than 60,000 individuals, 4,335 SMEs (small and medium enterprises) and 485 corporates have benefitted from the support initiative launched in March. 

The transportation sector benefited the most, followed by hospitality and entertainment, according to data shared by the country’s central bank. 

The support mechanisms offered under the emergency package included deferment of repayment instalments for up to six months without classification as default, suspension of interest and fees on affected facilities as well as continuing credit financing for priority economic sectors.

No minimum loan size is required to benefit from the support package. 

The banking sector grew in the two months starting March 1, with assets rising 2.1%, loans by 3.2% and deposits by 1.9%. The monetary base cover ratio reached 115.3%. The ratio reflects the central bank’s responsibility to hold foreign reserves no less than 70% of its monetary base. Foreign reserves include gold, foreign currency cash and deposits and foreign securities.

The central bank announced a support package for banks on March 17, under which lenders were permitted to access reserve balances of up to 30% of the cash reserve requirement and availability of term liquidity facilities in dirham and dollar denominations. Lenders could delay the classification of affected customer loans as non-performing. 

The country’s banking system had a liquidity surplus of $48.19 billion (177 billion dirhams) on February 28, the first day of the conflict, it slipped to $26.4 billion (97 billion dirhams) on March 30, marking a drop of around 45% in roughly one calendar month. The country injected $8 billion into the banking sector on March 31, stemming from a rise in the central bank’s contingent liquidity insurance facility. 

The liquidity surplus stood at around 125 billion dirhams on May 10, according to CBUAE data. 

S&P Global Ratings said in March that banks did not report any significant funding outflows but cautioned that the full impact on banks’ asset quality indicators would take time to materialize. 

“Overall, we expect some deterioration in banks' financial performance in 2026, the extent of which will depend on the conflict’s duration and impact on local economies,” the rating agency added.