Coverage: Q2 2026 · Information to 25 September 2026
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Published: 25 September 2026 | Region: Middle East & North Africa | Country: United Arab Emirates | Coverage: Q2 2026 (April–June 2026) | Classification: Premium Intelligence
Desk view — United Arab Emirates, Q2 2026
- The banks absorbed a war shock without a balance-sheet event. Gross credit rose to AED 2,757.8 billion at end-June 2026, about 2.3% above end-March.
- Profits are still rising, but unevenly. ADCB lifted H1 2026 profit before tax 28% and Mashreq 18%, while Emirates NBD (+5%), First Abu Dhabi Bank (+3%) and Dubai Islamic Bank (+1%) grew more slowly.
- Buffers are high. Sector capital adequacy was 16.8% and CET1 14.3% at end-March 2026; the overall NPL ratio fell to a record-low 2.8% at end-June, and all five large banks report CET1 of 13.0–13.8%.
- Policy has turned. The Central Bank of the UAE held its base rate at 3.65% through the quarter, then raised it by 25 basis points to 3.90% on 16 September 2026, following the US Federal Reserve.
- The CBUAE projects real GDP growth of 1.7% in 2026, down from 6.2% in 2025, before a rebound to 9.8% in 2027.
Executive summary
The second quarter of 2026 tested the UAE banking system in a way that few stress scenarios had anticipated. The regional conflict involving Iran disrupted shipping through the Strait of Hormuz, and the Central Bank of the UAE (CBUAE) reports that oil production was 34.3% lower year on year in March and 30.4% lower in April. The CBUAE responded in March with a Financial Institution Resilience Package that eased access to reserves, released capital buffers and allowed banks to defer the reclassification of loans to affected borrowers. By end-June, lending was still growing and asset quality at the large banks had not deteriorated.
Sector gross credit reached AED 2,757.8 billion at end-June 2026, up about 2.3% on end-March and 7.3% on end-2025. A growing share of new lending was booked abroad, helped by Emirates NBD’s acquisition of 60% of India’s RBL Bank on 18 June 2026. The latest supervisory ratios show a capital adequacy ratio of 16.8% at end-March 2026 and an overall non-performing loan ratio of 2.8% at end-June, a record low.
Bank earnings diverged. The five leading listed banks all grew first-half profit before tax, but growth ranged from 1% at Dubai Islamic Bank to 28% at ADCB. After-tax profit growth trailed pre-tax growth at Emirates NBD, First Abu Dhabi Bank and Dubai Islamic Bank. Our central case is that the system remains well capitalised and liquid through the rest of 2026; the main risks are a longer disruption to Gulf shipping, a correction in Dubai real estate and the eventual unwinding of loan-deferral relief.