After a torrid 2020, the pressure on banks in the UAE has eased considerably. The timing of the Covid-19 pandemic was unfortunate for lenders in the Middle East’s second-largest economy, with business sentiment weighed down by ailing construction and real estate sectors. In addition to the economic hit from local lockdowns, as well as sharp falls in oil prices, tourism and trade, local banks found themselves exposed to the collapse of two of the country’s flagship corporations.
Lenders have ridden out the pandemic on the back of high capital ratios — with a few exceptions among smaller lenders — and support measures from the Central Bank of the UAE (CBUAE), many of which are set to remain in place until at least June 2022.
