UAE banking system stays strong, support plan to continue: CBUAE

Business Bureau, Gulf Today

Our assessment and recent economic data point to a post-pandemic rebound of the UAE economy. The UAE banking system remains resilient, and our support measures in the form of the CBUAE’s Targeted Economic Support Scheme and other measures will remain in place until the middle of next year. Against this background, we expect banks to support the economy and ensure a continued flow of funds to creditworthy retail and corporate clients.

This was revealed by  Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), on Tuesday during  a meeting with the CEOs of all banks operating in the UAE to discuss the macroeconomic environment, provide the CBUAE’s assessment of financial stability, and inform about the CBUAE’s ongoing regulatory and supervisory initiatives. A particular focus of the meeting was on the role of banks in supporting the UAE’s economic recovery by ensuring the continued flow of credit to the economy.

The Governor informed bank CEOs of the CBUAE’s assessment of financial stability in the UAE. The CBUAE assesses the financial system of the UAE as stable. Liquidity and capital buffers of banks remain adequate, supported by stable deposit volumes and growth in capital market funding. Meeting participants also discussed areas subject to close monitoring by the CBUAE, which included asset quality and credit conditions.

The CBUAE emphasised the role of the banking sector in the continued flow of credit to the private sector, supported by different components of the CBUAE’s Targeted Economic Support Scheme (TESS). He  emphasised that the TESS was extended until 30 June 2022, in the expectation that banks will continue to support the UAE’s recovery by continuing to lend to creditworthy customers.

Against the background of gradual economic recovery, continued government support and healthy funding growth, bank lending remains flat, reflecting subdued demand and the conservative risk appetite. Meeting participants discussed the pre-requisites and critical enablers for the banking sector to increase their support of the UAE economy, especially during the early stages of recovery.

Meeting participants also discussed the trends in the real estate market and the CBUAE’s proposed framework for surveillance and supervision of real estate exposures, with a view of addressing the risks associated with lending to this sector.

Balama said: “ADQ credit rating: ADQ, one of the region’s largest holding companies with a broad portfolio of major enterprises spanning key sectors of Abu Dhabi’s diversified economy, has been assigned long-term issuer credit ratings of Aa2 (Stable) and AA (Stable) from leading global credit ratings agencies, Moody’s and Fitch, respectively.

The credit ratings, which are on par with the Abu Dhabi government’s credit ratings, validate ADQ’s solid financial position and valued role as a strategic partner of the Abu Dhabi government to deliver continued prosperity for the Emirate and the nation. The assigned credit ratings provide enhanced visibility and confidence over ADQ’s creditworthiness to strategic partners, financial institutions and investors.

Mohamed Hassan Alsuwaidi, Chief Executive Officer of ADQ, said: “ADQ’s very strong credit ratings are consistent with the Abu Dhabi government’s solid financial standing. The ratings are a reflection of ADQ’s robust portfolio and important role in the diversification of the Abu Dhabi economy. As a new engine of growth for Abu Dhabi’s economic diversity and prosperity, we are well positioned to grow our clusters and manage our portfolio of assets.”

Marcos de Quadros, Chief Financial Officer of ADQ, said: “From the outset, ADQ has consistently applied rigorous portfolio management principles and a disciplined approach to capital deployment to deliver on our mandate to create value for our strategic partner and shareholder, the Abu Dhabi Government. The very strong credit ratings are a testament of our progress and will provide ADQ with new opportunities to further diversify and optimise our capital structure.”

Meanwhile, Abu Dhabi National Exhibitions Company (Adnec has launched “Tourism 365” to create experiential travel opportunities for tourists coming to Abu Dhabi, and enhance the emirate’s regional and global positioning in the wider tourism sector.

The launch of the company is in line with Adnec’s new broader role to support the growth of Abu Dhabi as a tourism destination, increasing leisure visitors, enhancing guest experiences, and extending their stay in the UAE’s capital.

The company will work in concert with key stakeholders across Abu Dhabi’s tourism sector and the UAE. It will include Capital Experience, a high-quality destination management company, and Capital Travel, a premium travel operator.

Humaid Matar Al Dhaheri, Managing Director and Group CEO of Adnec, commented, “In launching Tourism 365, ADNEC continues to fulfil its strategy in developing Abu Dhabi’s tourism sector. Through strengthening and enhancing our business portfolio in tourism, and expanding to include leisure tourism, we actively amplify the economic impact of Adnec Group.”

Tourism 365 will play a critical role in growing the emirate of Abu Dhabi as one of the Middle East’s leading tourism destinations. “It will do so through close collaboration with partners across the government and private sectors, most notably the Department of Culture and Tourism - Abu Dhabi (DCT Abu Dhabi), alongside local and global companies specialised in this critical sector,” he added.