Bank liquidity in UAE surges 20% in Q2

• Liquid assets hit $218bn
• Capital adequacy nears 20%

Liquid assets in the UAE’s banking sector rose to AED801 billion ($218 billion) by the end of the second quarter of 2024, up 20 percent from the same period last year, the Central Bank of the UAE has revealed. 

The increase was AED135 billion year on year, with a quarterly gain of 2 percent, or AED15 billion, compared with Q1 2024.

Liquid assets, which include cash, central bank reserves and other easily sellable assets, provide banks with the flexibility to meet short-term obligations.

• UAE’s gold reserves rise 13% to $5.3bn

• UAE bank deposits soar as higher rates attract savers

They now account for almost a fifth of the UAE banking sector’s total assets of AED4 trillion, slightly up from the previous quarter, indicating a steady build-up of cash reserves amid uncertain global economic conditions.

The central bank’s data also shows a strong capital position, with a total capital adequacy ratio of a little over 18 percent at the end of Q2, well above the regulatory minimum of 13 percent. 

This ratio measures a bank’s capital against its risk-weighted assets, reflecting its ability to absorb potential losses. 

The higher the ratio, the more protected depositors are, enhancing financial stability.