ABU DHABI, September 23, 2021 (WAM) – The Governor of the Central Bank of the UAE (CBUAE), Khaled Mohamed Balama, affirmed the bank’s assessment of financial stability in the UAE, and the CBUAE’s plans regarding the gradual withdrawal of its extraordinary support measures.
The statement was made during a recent meeting with the CEOs of some domestic and foreign banks operating in the UAE, attended by Abdelaziz Al-Ghurair, President of the Federation of UAE Banks.
Mr Balama said: “Our assessment, confirmed by recent economic data, confirms the gradual recovery of the UAE economy. As we enter the next phase of the post-COVID recovery, extraordinary aid measures will be less needed. We expect banks to help support our economic recovery and ensure the continued flow of funds to creditworthy borrowers, individuals and businesses. “
Supported by the ongoing economic recovery, the CBUAE assessed the UAE’s financial system to be stable. The liquidity of the banking system and the capital buffers of the banks remained adequate. The governor said the CBUAE will continue to closely monitor the quality of banks’ assets and the adequacy of provisions.
In view of the gradual increase in economic activity, the CBUAE is initiating a gradual and well-calibrated withdrawal of its Targeted Economic Support Program (TESS) to avoid restricting the supply of credit and economic growth. Participants agreed that the TESS program had achieved its goal of mitigating the negative effects of the COVID-19 pandemic on the UAE’s economy.
Fifteen percent of the UAE banks’ loan portfolio benefited from the TESS deferral program.
The bank also confirmed that in the short term, it will leave unchanged the temporary drop in reserve requirements for banks and the level of the loan-to-value ratio applicable to mortgages for first-time homebuyers.
The CBUAE has already announced that the loan deferral component of the TESS program will expire at the end of 2021, but the CBUAE’s zero-cost loan facility can be used to provide new loans until mid-2022.
The Bank previously announced that its regulatory relief measures that allowed banks to maintain weaker capital and liquidity buffers would expire at the end of 2021. However, the CBUAE is closely monitoring the economic recovery and demand for loans, and plans to extend these measures for a limited period in order to facilitate a smooth economic recovery.
Translated by: Gihane Fawzi.
https://wam.ae/en/details/1395302973008
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