UAE Banking Assets Hit 4.749tn Dirhams in April 2025 as Credit and Deposits Rise, CBUAE Reports
A broad view of the UAE’s banking landscape in April 2025 shows a carefully balanced expansion across total assets, lending, and funding, alongside nuanced shifts in money supply and central-bank positioning. The sector continued to chart modest month-on-month gains, signaling ongoing liquidity and resilience amid a period of calibrated growth. Total banking sector assets, including bankers’ acceptances, rose to a little over 4.749 trillion dirhams at the end of April 2025, climbing 0.6% from March’s 4.719 trillion. This expansion reflects a combination of higher credit activity, deposits, and the central bank’s balance-sheet dynamics, illustrating how the UAE’s financial system is absorbing and processing growth impulses while maintaining a stable liquidity framework. During the same interval, total bank credit advanced by 0.9% to 2.259 trillion dirhams, up from 2.240 trillion in March, underscoring a broadening of credit availability across the economy. The drivers behind this credit uptick were clearly delineated: a net rise of 12.3 billion dirhams in domestic credit and an additional 7.1 billion dirhams in foreign credit, signaling a dual-anchored expansion that includes both domestic lending activities and cross-border credit interactions. Domestic credit growth was not uniform across subsectors. Lending to the government sector rose by 0.7% versus the prior month, lending to the public sector, particularly government-related entities, grew by 1.2%, and lending to the private sector increased by 0.6%. In contrast, credit extended to non-banking financial institutions declined by 4.3%, pointing to a selective rebalancing within the financial intermediation landscape that could reflect changes in credit appetites, risk assessments, or regulatory and capital considerations affecting certain non-bank lenders. These movements collectively portray a credit environment that is expanding, albeit with sectoral nuances that reflect macro-financial priorities and risk calibrations within the UAE.
In the realm of funding, the banking system’s deposits also registered a constructive advance, with total deposits rising by 1% month on month to exceed 2.965 trillion dirhams, up from 2.936 trillion in March. This uptick is particularly noteworthy in the context of the overall liquidity framework, as it underscores continued deposit-taking strength alongside a favorable funding mix for banks. Within the deposit category, resident deposits ticked up by 0.1% to just over 2.689 trillion dirhams, while non-resident or offshore deposits surged significantly, climbing by 10.9% to reach 275.6 billion dirhams. The evidence of stronger non-resident funding channels points to sustained international confidence in the UAE banking system and continued cross-border capital flows that support liquidity and stability. Delving into the composition of resident deposits reveals further detail: deposits from the government sector rose by 0.9%, while private-sector deposits increased by 1.1%, indicating a risk- and policy-sensitive shift toward core government and private-account funding within the domestic banking system. Meanwhile, funding from non-banking financial institutions fell by 9.2%, and deposits from government-related entities declined by 6.5%, underscoring a selective rebalancing within the domestic funding base that could be tied to portfolio adjustments, regulatory changes, or shifting liquidity management strategies among these groups. Together, the deposit dynamics show a broad base of funding generation, with a tilt toward non-resident energy and manufacturing-related inflows that complement domestic deposits while preserving sectoral balance.
The monetary aggregates presented a mixed picture, reflecting the evolving liquidity stance and the central bank’s liquidity management approach. The M1 monetary aggregate widened by 2.6% to reach 1.0119 trillion dirhams in April, up from 986.2 billion in March. This expansion was driven by a notable increase of 26.9 billion dirhams in monetary deposits, which more than offset a modest contraction of 1.2 billion dirhams in currency outside banks. The rise in M1 underscores a shift toward higher readily available money balances within the economy, potentially signaling increased liquidity in the hands of the public and institutions that could feed short-term spending and investment activity. By contrast, the broader M2 aggregate declined by 0.1% to 2.435 trillion dirhams, retreating from 2.4377 trillion in March. The key factor behind the slide in M2 was a significant fall of 27.8 billion dirhams in quasi-monetary deposits, which typically include instruments that can be quickly converted to cash or that function as near-cash assets. This decline suggests a reallocation of short-term liquidity away from quasi-monetary instruments toward other channels within the financial system, possibly into more liquid deposit forms or into direct lending activity as banks adjust their asset compositions in response to funding costs and demand conditions. The broader interpretation is that while on the surface the money supply category narrowed slightly, the underlying liquidity conditions remained ample, supported by other components of the banking system’s balance sheet.
The broader M3 monetary aggregate—an even wider measure that includes M2 and other large, liquid market instruments—rose by 0.2% to 2.8982 trillion dirhams, from 2.8937 trillion in March. This modest expansion was anchored by a 6.6 billion dirham increase in government deposits, highlighting how public sector funding into the banking system contributed to the broader money supply environment. The interplay among M1, M2, and M3 reveals a layered liquidity story: while everyday liquidity (as captured by M1) and broader monetary avenues (M3) moved higher or held steady in certain aspects, there was a dip in quasi-monetary components that dampened M2’s overall growth. The consequence is a nuanced liquidity matrix where government-related funding and central-bank facilities interact with private-sector funding to shape the day-to-day availability of money in the economy.
The monetary base, which forms the core of the central bank’s monetary policy operations and liquidity provisioning, contracted by 1.7% to 819 billion dirhams in April, down from 833.1 billion in March. This decrease was driven by a 2.5% fall in issued currency (currency in circulation) and a substantial 32.0% drop in reserve accounts. These currency and reserve-account dynamics contributed to the contraction of the base, signaling adjustments in the macro-monetary environment that can influence short-term interest rates, banks’ liquidity buffers, and the cost of funds in the interbank market. That said, the contraction in the base was partially offset by a remarkable surge of 159.8% in current accounts and overnight deposits held by banks and financial institutions at the central bank, coupled with a 3.1% rise in monetary bills and Islamic certificates of deposit. This partial offset is critical: it underscores that while the physical currency and reserve formulations tightened, the central bank’s day-to-day liquidity plumbing—through large balances in current accounts and overnight facilities—helped sustain the liquidity framework. The net effect is a base that moved lower in nominal terms but remained supported by dynamic intraday funding channels that enable banks to manage liquidity efficiently during daily operations and interbank activity.
The central bank’s foreign assets, a crucial indicator of the UAE’s external liquidity and reserve position, edged higher to 937.5 billion dirhams at the end of April, up from 935.2 billion in March. This uptick reflects continued accumulation or reallocation of foreign assets, pointing to a stable external liquidity stance even as domestic liquidity conditions evolve. The composition of these foreign assets breaks down into several key components: 403.2 billion dirhams in bank balances and deposits abroad, 490.1 billion dirhams in foreign securities, and 44.1 billion dirhams in other foreign assets. The central bank’s total balance sheet stood at 972.3 billion dirhams, with liabilities and assets distributed across both sides of the ledger. On the liability side, the balance sheet comprises 449.1 billion dirhams in current and deposit accounts, 279.9 billion dirhams in monetary bills and Islamic certificates of deposit, 165.2 billion dirhams in currency in circulation, 33.2 billion dirhams in other liabilities, and 45 billion dirhams in capital and reserves. On the asset side, the balance sheet also lists 210.9 billion dirhams in cash and bank balances, 208 billion dirhams in deposits, 516.8 billion dirhams in investments, 0.5 billion dirhams in loans and advances, and 36.2 billion dirhams in other assets. Taken together, these figures sketch a central bank that maintains a robust foreign-assets cushion and a diversified asset base, which collectively reinforce macroeconomic stability and the capacity to respond to shifting liquidity demands within the UAE’s financial system.
Within this broad picture, several structural themes emerge that merit close attention for policymakers, market participants, and analysts tracking the UAE’s financial trajectory. First, the ongoing expansion of total banking sector assets alongside a modest rise in overall bank credit suggests a synchronized growth pattern where lending activity is supported by a stable deposit base and a liquid funding environment. The domestic credit expansion, particularly in the government and public sectors, signals policy-oriented lending that aligns with sovereign and public financing needs, while the private sector’s continued but tempered growth points to a measured risk appetite and prudent credit provisioning. The retreat in credit to non-banking financial institutions presents an interesting counterpoint to the overall credit cycle, implying a potential realignment within the non-bank lending space that could reflect regulatory shifts, sector-specific risk, or a re-prioritization of balance-sheet strategies across financial institutions.
Second, the deposits landscape reinforces a resilient funding structure, with a broad-based increase in deposits supported by non-resident inflows that underscore the UAE’s attractiveness to international capital. The divergence between resident and non-resident deposit movements highlights how cross-border flows can provide a cushion for domestic liquidity while domestic deposit dynamics are shaped by government and private-sector behavior. The notable decline in deposits from NBFCs and government-related entities points to targeted adjustments within institutional funding channels, which could reflect evolving liquidity management practices or regulatory expectations requiring banks to diversify and strengthen funding buffers.
Third, the monetary aggregates reveal a layered liquidity stance. The rise in M1 indicates more accessible money for spending and investment in the near term, while the slight dip in M2, driven by quasi-monetary deposits, suggests a reallocation of short-term liquidity away from near-cash instruments. The modest uptick in M3, buoyed by government deposits, reinforces the role of public sector funding in expanding the broader money supply. The base’s contraction, tempered by a surge in current accounts and overnight deposits at the central bank, highlights the central bank’s active liquidity management and its ability to influence intraday funding while keeping longer-term monetary conditions in check. Together, these dynamics paint a picture of a balanced but dynamic monetary environment in which liquidity is abundant enough to support lending and growth, yet calibrated to manage potential inflationary pressures or credit risk through careful reserve and currency management.
For market observers, the data point to a UAE banking system that remains robust and adaptable in the face of evolving global and regional financial conditions. The growth in foreign assets and the resilience of the deposits base contribute to a stable external funding framework, ensuring that the banking sector has the resources to cope with potential external shocks. At the same time, the sector’s domestic credit expansion, led by government and public-sector lending, reinforces the sense that policy priorities continue to target infrastructural development, public services, and strategic investments that can bolster long-term growth. The subtle adjustments within the NBFC sector and government-related funding flows warrant continued monitoring, as they can influence liquidity cycles, capital adequacy, and the cost of funds for banks in the medium term. In sum, the April 2025 data illustrate a well-balanced, liquid, and resilient UAE banking system that is capable of supporting economic activity while maintaining prudent risk management and strong capital and liquidity positions.
Overview of the broader external and internal balance sheets underscores the UAE’s continued emphasis on maintaining a strong macroeconomic buffer. The central bank’s foreign assets, totaling 937.5 billion dirhams, form a substantial reserve base that complements the domestic growth engine by ensuring liquidity support and foreign-exchange stability when needed. The multi-layered balance sheet—comprising a sizable cash and bank-balances component, a substantial investment portfolio, and a meaningful share of foreign securities—demonstrates a diversified approach to safeguarding financial stability. On the liability side, the combination of substantial current and deposit accounts with a solid base of monetary bills and certificates of deposit points to a robust and diversified funding mix that can sustain banks through varying liquidity conditions. The currency in circulation and reserve-account dynamics reflect a system that remains highly sensitive to policy signals, with currency movements and reserve adjustments providing levers for the central bank to steer liquidity without compromising the broader expansion in lending and deposit-taking.
Looking ahead, the interplay among credit growth, deposit dynamics, and the central bank’s balance-sheet behavior will continue to shape the UAE’s financial environment. Banks will likely monitor the trajectory of non-banking financial institutions’ credit, as well as government-related and public-sector funding flows, for implications on risk-weighted assets, capital adequacy, and liquidity coverage ratios. Policymakers may also pay close attention to the relative strength of foreign assets, which help cushion potential external shocks and preserve confidence in the UAE’s monetary and financial stability framework. Given the current posture, it is reasonable to anticipate that the UAE’s banking system will remain capable of supporting ongoing development projects, private-sector expansion, and public initiatives, while maintaining a cautious stance toward credit risk, liquidity volatility, and macroeconomic pressures that could emerge from a shifting global environment. The April 2025 indicators collectively reinforce a positive, methodical path for the UAE’s financial sector—one that emphasizes resilience, prudence, and sustained growth through a diversified and well-capitalized banking system.
Conclusion
In summary, the April 2025 data set confirms a UAE banking sector that is expanding its scale while refining its credit and liquidity mix. Total assets rose modestly, driven by a credit environment that gained ground, with a clear tilt toward domestic government-related lending and public-sector financing alongside a steady but selective expansion in private-sector credit. Deposits posted a solid gain, supported by both resident and non-resident inflows, although some funding channels within the domestic ecosystem showed selective pullbacks. The monetary aggregates presented a layered narrative: M1 moved higher as immediate liquidity strengthened, M2 slipped on a decline in quasi-monetary instruments, and M3 benefited from government deposits, reflecting a resilient and diversified money supply environment. The monetary base’s contraction was offset by a surge in central-bank current accounts and overnight deposits, highlighting the central bank’s active liquidity management role in maintaining stable conditions for banks and borrowers alike. The central bank’s foreign assets rose and the balance sheet structure remained robust, underscoring the UAE’s commitment to liquidity cushions and a diversified asset profile that supports financial stability.
Taken together, these indicators suggest that the UAE’s banking system remains well-positioned to support ongoing economic activity and developmental objectives, even as it navigates sector-specific shifts in lending and funding. The persistence of strong foreign-asset holdings, a diversified deposit base, and a measured but meaningful credit expansion collectively point to a stable and resilient financial environment. For policymakers, regulators, and market participants, the April 2025 snapshot offers valuable evidence of a functioning framework that can adapt to evolving economic conditions, maintain prudent risk management, and sustain confidence in the UAE’s financial system. As the economy continues to evolve, close attention to sectoral credit dynamics, the behavior of non-bank lenders, and the interplay between domestic deposits and international funding will be essential to anticipate future liquidity movements, funding costs, and credit conditions. The UAE’s central bank balance-sheet posture and the demonstrated capacity to deploy liquidity where needed will remain central to preserving macroeconomic stability and supporting a favorable environment for sustainable growth.