Financial Stability Report 2025 shows stronger asset quality, robust profitability and solid capital buffers as banks withstand stress-test scenarios
Abu Dhabi: The Central Bank of the UAE (CBUAE) has issued its Financial Stability Report 2025, highlighting the strength and resilience of the UAE’s financial and banking system, supported by solid economic performance, strong capitalisation, ample liquidity and continued growth in lending and deposits.
The report showed that total assets of the UAE banking sector increased by 17.1% to reach AED5.3 trillion by the end of 2025.
The sector’s loan portfolio expanded by 17.8%, driven primarily by increased domestic lending, particularly to retail customers and private-sector businesses.
Asset quality continued to improve, with the non-performing loan (NPL) ratio declining to 3.3% in 2025, compared with 4.7% in 2024 and 8.2% in 2020.
The banking sector also maintained strong capital levels, with the Capital Adequacy Ratio (CAR) standing at 17% at the end of 2025, comfortably above minimum regulatory requirements.
Profitability remained strong, with net profits increasing by 11.7% to AED90.8 billion during 2025, supported by growth in total operating income.
The sector also maintained healthy liquidity levels, underpinned by continued growth in customer deposits.
The report noted that the results of the CBUAE’s 2025 supervisory stress tests confirmed the sector’s ability to withstand severe economic and financial shocks.
Under the adverse stress-test scenario, the average Common Equity Tier 1 (CET1) ratio declined from 14.1% to 11.1% at its lowest point during the testing period, while remaining above minimum regulatory requirements.
The report also highlighted the continued resilience of other components of the financial system, including the insurance sector and Islamic banking industry.
In addition, it pointed to ongoing progress in financial infrastructure and payment systems under the Financial Infrastructure Transformation (FIT) Programme, supporting digital transformation and strengthening the efficiency of the financial system.
Among the key developments were improvements in payment platforms, including Aani, the UAE’s instant payments platform, and Jaywan, the national card payment scheme, alongside initiatives to enhance cross-border payment capabilities.
Khaled Mohamed Balama, Governor of the CBUAE, said: “The Financial Stability Report 2025 affirms the strength and resilience of the UAE financial system and its ability to continue supporting the national economy efficiently, underpinned by adequate capital and liquidity, improved asset quality, and continued growth in credit, deposits and profitability.”
He added: “The CBUAE will continue to strengthen its supervisory and prudential frameworks and enhance the financial system’s preparedness to address future risks and challenges, contributing to safeguarding financial stability and supporting sustainable economic growth.”
Source: Emirates 24|7