The United Arab Emirates economy is rapidly recovering from the aftermath of the global financial crisis, supported by high oil prices and an increase in real estate activity, tourism and other services. The credit cycle has also passed its lowest point and credit growth is in line with growth in gross domestic product (GDP).
A systemic risk assessment of the banking system, from the absolute level of GDP-to-loan ratio, the credit-to-GDP ratio gap or the liquidity levels, shows no indication of a vulnerability build-up as of June 2013. A traditional review of the International Monetary Fund’s key financial soundness indicators shows continuous improvement. In particular, non-performing loans (NPLs) have reached their peak and are expected to decline from this point onward. Provision coverage of NPLs continues to remain adequate and profitability levels of banks are healthy.