CBUAE is committed to supporting the continued economic recovery and confirms that the withdrawal of support measures will be gradual

ABU DHABI, September 23, 2021 (WAM) – The Governor of the Central Bank of the United Arab Emirates (CBUAE), Khaled Mohamed Balama, affirmed the bank’s assessment of financial stability in the United Arab Emirates and the plans of the CBUAE with 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, which was attended by Abdelaziz Al-Ghurair, president of the UAE Federation of Banks.

Balama said: “Our assessment, confirmed by recent economic data, confirms the gradual recovery of the UAE economy. As we move into the next phase of the post-COVID recovery, extraordinary relief measures will be less necessary. We expect that banks 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 that 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 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 the temporary drop in reserve requirements for banks and the level of the loan-to-value ratio applicable to first-time homebuyer mortgages unchanged.

The CBUAE has already announced that the loan deferral component of the TESS program will expire at the end of 2021, but the CBUAE zero-cost line of credit can be used to make new loans until mid-2022.

The Bank previously announced that its regulatory relief measures allowing banks to hold weaker capital and liquidity buffers would expire in late 2021. However, the CBUAE is closely monitoring the economic recovery and loan demand, and plans to extend these measurements for a period of time. limited period to facilitate a smooth economic recovery.

Translated by: Gihane Fawzi.


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