Banks in the UAE have reduced the use of Central Bank’s Targeted Economic Support Scheme (TESS), which was launched last year in a bid to support local financial institutions and the private sector against the Covid-19 pandemic and also to ensure liquidity in a depressed market.
“The utilisation of the TESS programme, which has now come down to about 50 per cent from its peak, is a strong indicator that banks are gradually coming back to manage their credit books and navigate the way forward. The Central Bank had approved in excess of Dh15 billion (b) in dividends, based on their compliance with supervisory requirements,” said Abdulhamid M Saeed Alahmadi, the Governor of the UAE’s Central Bank.
Alahmadi said banks and financial institutions in the UAE have displayed robustness, despite the contagion’s relentless onslaught.
The Central Bank had announced a $70b stimulus package in March 2020 and some of the support measures under this stimulus package were later extended till June 2021.
“The banking system’s gross assets, deposits and lending have all increased, albeit, slightly. The more than adequate levels of capital (18.2 per cent, tier 1 of 17.1 per cent) and eligible liquid asset ratio (18.4 per cent) in the system, alongside sufficient levels of provisioning, means that banks and financial institutions in the UAE have displayed robustness in the face of the pandemic’s onslaught. While profit may be down for some banks, they are due to the impact of a bad year, rather than a fundamental shift in solvency and the appetite to do business,” said Alahmadi.
He noted that the financial figures presented by banks and other financial institutions for the last financial year are encouraging and show the resilience that the banking system has built over time.
“The banking system’s gross assets, deposits and lending have all increased, albeit, slightly. The more than adequate levels of capital (18.2 per cent, tier 1 of 17.1 per cent) and eligible liquid asset ratio (18.4 per cent) in the system, alongside sufficient levels of provisioning, means that banks and financial institutions in the UAE have displayed robustness in the face of the pandemic’s onslaught. While profit may be down for some banks, they are due to the impact of a bad year, rather than a fundamental shift in solvency and the appetite to do business,” said Alahmadi.
