United Arab Emirates banks are facing the Middle East conflict with strong capital and liquidity positions, according to the central bank. The Central Bank of the UAE has said the sector's capital adequacy ratio stands at 17% and its liquidity coverage ratio exceeds 146.6%.
Governor Khaled Mohamed Balama emphasized this strength in a March statement, noting that total banking assets now exceed AED 5.42 trillion, equivalent to $1.48 trillion. "The UAE’s banking and financial sector continues to maintain very strong levels of capital adequacy and liquidity," Balama said. He added that payment systems and national financial infrastructure operate with "full efficiency and stability."
CENTRAL BANK STEPS IN
In response to global and regional pressures, the Central Bank's board approved a resilience package offering banks greater flexibility. This includes eased access to liquidity, temporary relief on funding and capital buffers, and the option to defer classification of certain loans for customers affected by current conditions. Pinsent Masons partners Seya Rahnema and Matthew Escritt commented on the sector's position, with Rahnema stating, "Even amid elevated regional uncertainty, the core prudential indicators of the UAE banking sector remain a strong source of reassurance. Capital adequacy of around 17% and liquidity coverage ratios above 146% place banks well above international regulatory benchmarks."
Escritt underscored the regulatory response's endorsement by market players and ratings agencies: "It is reassuring to see the effectiveness of the UAE’s regulatory response... It inspires confidence in the country's ability to recover rapidly from the challenges it is currently facing." Qatar's central bank has also announced loan deferrals of up to three months and unlimited riyal repo facilities.
RATINGS AGENCIES BACK STABILITY
Global credit watchers have reaffirmed the UAE's soundness. S&P upheld its AA/A-1+ ratings, citing very low long-term credit risk. Fitch echoed this, reporting that Gulf banking systems face few immediate credit risks from the regional conflict, with institutions boasting sound financial metrics, and ample liquidity and capital buffers. Separately, Henrik Raber, head of global banking at Standard Chartered in Dubai, who told The National the bank remains "positive" about the UAE's medium-term outlook, viewing current energy shocks as a "short-term spike" to navigate.
David Manlowe, CEO of Benefit Street Partners, added that the conflict "has not diminished" their enthusiasm for the region.
GROWTH DATA UNDERSCORES VIGOR
Recent figures paint a picture of expansion amid turmoil. UAE gross banking assets rose 1.4% month-on-month to AED 5.41 trillion in January 2026, driven by 1.1% monthly gross credit growth to AED 2.598 trillion. The Central Bank's foreign assets topped AED 1.084 trillion by end-January. This credit growth was recorded before the late-March Iranian strikes on key infrastructure such as Emirates Global Aluminium and Bahrain's Alba smelter, which have pushed LME aluminium cash prices up nearly 6%.
Rystad Energy estimated on 25 March that repairing damaged energy infrastructure in the Middle East would cost at least $25 billion. Standard Chartered's Raber pointed to the market's experience in dealing with higher inflation after Covid, while Governor Balama has reaffirmed that operations continue uninterrupted.
REGIONAL CONTEXT, GLOBAL EYES
Qatar's central bank also cut its reserve requirement on deposits to 3.5% from 4.5%.
Pinsent Masons' Rahnema ties it together: the reaffirmed AA/A-1+ ratings, alongside prudential strengths, position UAE banks to "absorb shocks while continuing to support economic activity."