UAE banking assets rise to Dh4.749 trillion in April 2025, CBUAE reports

A broad view of the UAE’s banking sector in April 2025 shows a continuation of steady liquidity and credit activity, with total sector assets crossing the Dhs4.7 trillion mark and deposits edging higher on improving resilience across resident and non-resident bases. Lending dynamics remained positive overall, led by government and public-sector credit extensions, even as non-banking financial institutions trimmed their borrowings. The central bank’s balance sheet and foreign asset position also showed modest gains, painting a picture of a still-liquid, policy-influenced banking system as the UAE navigates a complex macro backdrop.

Total banking sector assets and lending backdrop

Total banking sector assets in the UAE, including bankers’ acceptances, climbed 0.6 percent month-on-month to exceed Dhs4.749 trillion by the end of April 2025, moving up from around Dhs4.719 trillion in March. This uptick, recorded by the Central Bank of the UAE (CBUAE), mirrors a period of sustained balance sheet expansion and liquidity support that allows banks to maintain lending activity while managing credit risk. The month-on-month rise underscores the ongoing capacity of the UAE banking system to absorb higher asset levels, aided by stable domestic deposit flows and a resilient foreign asset position.

Concurrently, total bank credit increased by 0.9 percent to surpass Dhs2.259 trillion, up from Dhs2.240 trillion the prior month. The growth in credit was propelled by two principal components: domestic credit, which rose by Dhs12.3 billion, and foreign credit, which rose by Dhs7.1 billion. Taken together, these contributions reflect a balanced expansion in both internal and external lending channels, signaling continued appetite for financing across multiple sectors:

• Domestic credit expanded on the strength of government and public-sector activity. The government sector carried a 0.7 percent increase in lending, while lending to the public sector—specifically government-related entities—rose by 1.2 percent. The private sector also experienced a 0.6 percent expansion, highlighting a broad-based improvement in credit access for private enterprises and individuals.

• In contrast, credit to non-banking financial institutions declined, falling by 4.3 percent. This drop suggests a rebalancing within the credit portfolio, with banks prioritizing core borrowers and potentially adjusting exposure to non-bank financial institutions in response to risk assessments or tighter funding conditions.

The net effect of these movements is a healthier overall credit environment, with government and public-sector lending forming a substantial portion of the increase, while some pockets of non-bank financial sector credit experienced retrenchment. The loan book’s expansion aligns with the broader macro picture of monetary conditions, where liquidity remains ample enough to support credit origination, even as banks undertake more selective risk management in certain high-risk sectors.

In keeping with the credit results, the overall shape of bank liabilities and funding profiles continued to evolve, with deposits forming a crucial pillar of stability for lending capacity. The following section delves into the deposit dynamics that underpin the lending trajectory observed in April 2025.

Deposits, monetary aggregates, and liquidity dynamics

Total bank deposits rose by 1 percent month-on-month to exceed Dhs2.965 trillion, up from Dhs2.936 trillion in March. This increment reflects a combination of elevated resident deposits and a notable surge in non-resident deposits, which climbed by 10.9 percent to reach Dhs275.6 billion. The expansion in deposits is an important counterbalance to lending growth, providing banks with stable funding and enabling ongoing credit extension to key sectors.

Within resident deposits, nominal improvements were uneven across subsectors. Government sector deposits advanced 0.9 percent, while private sector deposits rose 1.1 percent. Meanwhile, deposits from non-banking financial institutions decreased by 9.2 percent, and deposits from government-related entities fell by 6.5 percent. These shifts indicate a reallocation of funds within the domestic funding landscape, with government-related and non-banking financial institutions’ deposits retreating as other sources—particularly resident private sector and government deposits—stepped in to sustain overall funding.

The monetary aggregates—M1, M2, M3—and the monetary base portray a nuanced liquidity picture for April 2025:

• M1, a narrow money measure, grew 2.6 percent to Dhs1.0119 trillion, up from Dhs986.2 billion in March. The rise was driven by a Dhs26.9 billion increase in monetary deposits, which more than offset a Dhs1.2 billion decline in currency in circulation outside banks. This net gain implies heightened demand for highly liquid money, including demand deposits and other monetary deposits held with banks.

• M2, a broader money aggregate, declined slightly by 0.1 percent to Dhs2.435 trillion, down from Dhs2.4377 trillion. The fall was attributed to a Dhs27.8 billion decline in quasi-monetary deposits, which offset the gains from currency expansion and money held in broader liquidity channels. Despite the slight dip, the M2 path remained relatively stable around the 2.4 trillion mark, signaling a cautious but not contractionary liquidity stance within the UAE.

• M3, a still broader measure that includes M2 plus certain other quasi-governmental instruments, rose 0.2 percent to Dhs2.8982 trillion, up from Dhs2.8937 trillion in March. The incremental increase was supported by a Dhs6.6 billion rise in government deposits, suggesting a continued role for government deposits as a stabilizing liquidity sink within the macro framework.

• The monetary base, the foundation of the money supply, contracted by 1.7 percent to Dhs819 billion from Dhs833.1 billion in the prior month. The decrease stemmed from a 2.5 percent decline in issued currency and a 32.0 percent drop in reserve accounts. The contraction was partially offset by a striking 159.8 percent surge in current accounts and overnight deposits held by banks and financial institutions at the central bank, and a 3.1 percent rise in monetary bills and Islamic certificates of deposit. In short, while the base money experienced a reduction due to currency and reserves dynamics, the surge in central bank-facing deposits and related instruments helped cushion liquidity and supported broader monetary transmission.

Taken together, the movements in M1, M2, M3, and the monetary base reveal a complex liquidity landscape. The rise in M1 indicates a preference for highly liquid assets among the public and banks, even as broader liquidity (M2) softened marginally due to declines in quasi-monetary deposits. The modest improvement in M3 driven by higher government deposits underscores the role of government liquidity positions in shaping the broader money supply. The base money dynamics show a push-pull effect: currency contraction and reserve-account declines were offset by a robust rise in current and overnight bank deposits at the central bank, reflecting a rebuild in central-bank-facing liquidity channels that can feed into credit expansion if needed.

CBUAE foreign assets and the central bank’s balance sheet provide additional insight into the external side of monetary management. End-April foreign assets rose to Dhs937.5 billion from Dhs935.2 billion in March, illustrating a marginal gain in the central bank’s net international asset holdings. The components of these foreign assets included Dhs403.2 billion in bank balances and deposits abroad, Dhs490.1 billion in foreign securities, and Dhs44.1 billion in other foreign assets. The modest step-up in foreign assets complements the overall liquidity milieu, potentially contributing to exchange-rate stability and international financing flexibility.

The central bank’s total balance sheet stood at Dhs972.3 billion, broken down into on-balance items: Dhs449.1 billion in current and deposit accounts, Dhs279.9 billion in monetary bills and Islamic certificates of deposit, Dhs165.2 billion in currency in circulation, Dhs33.2 billion in other liabilities, and Dhs45 billion in capital and reserves. On the asset side, the balance sheet comprised Dhs210.9 billion in cash and bank balances, Dhs208 billion in deposits, Dhs516.8 billion in investments, Dhs0.5 billion in loans and advances, and Dhs36.2 billion in other assets. The composition shows a balance between liquid assets and investments, consistent with a central bank that is actively managing liquidity while maintaining a diversified asset base.

Taken together, these data points paint a picture of an orderly, well-funded UAE banking sector with ample liquidity, a modest shift toward greater private and government-related lending, and a central bank that continues to manage liquidity and external positions with a cautious but proactive approach. The subsequent section summarizes the implications of these trends for policy, banks, borrowers, and the broader economy.

The importance of understanding the aggregates and the implications for lending and policy

• M1’s growth signals demand for highly liquid money, pointing to sustained transactional activity in the economy and within the banking system’s immediate funding channels. A 2.6 percent rise in M1 alongside an increase in monetary deposits underscores confidence in the short-term monetary environment, even as currency in circulation outside banks edged lower.

• The slight dip in M2, driven by a drop in quasi-monetary deposits, suggests some moderating pressure on broader liquidity that includes near-money instruments. This could reflect a reallocation of funds toward more liquid assets or a response to risk assessments within the economy, while the overall money supply remains robust.

• M3’s uptick, aided by government deposits, highlights the government’s active funding role in shaping the broader liquidity landscape. This dynamic can support ongoing public-sector programs and public-private initiatives, potentially lending stability to growth-oriented projects.

• The contraction in the monetary base, despite a surge in central bank-facing deposits, indicates a nuanced policy stance where currency issuance and reserve account volatility are being managed, while the central bank leverages current accounts, overnight deposits, and other instruments to sustain liquidity and transmission to the banking system.

• The growth in total assets and the rise in foreign assets reflect a steady external footing for the UAE’s monetary authority. The combination of more foreign securities and higher bank balances abroad signals continued appetite for diversification and risk management in the face of global capital flows.

• The sector-specific credit movements—especially the increase in government and public-sector lending with a concurrent decline in non-banking financial institutions’ credit—point to targeted lending policies and risk management practices that prioritize core borrowers, while maintaining broad lending momentum.

These insights collectively indicate a resilient and adaptable UAE banking system. The balance between domestic and foreign credit growth, steady deposits, and careful management of monetary aggregates supports a stable financing environment for both the public sector and the private economy, even as institutions recalibrate exposure to certain non-bank financial segments.

Central bank foreign assets and balance-sheet dynamics

The UAE central bank’s foreign assets rose modestly to Dhs937.5 billion at the end of April, up from Dhs935.2 billion in March, signaling a continued capacity to manage external liquidity and portfolio risk. The composition of these foreign assets included Dhs403.2 billion in bank balances and deposits abroad, Dhs490.1 billion in foreign securities, and Dhs44.1 billion in other foreign assets. This asset mix suggests a balanced approach to international liquidity, combining cash-like holdings with a substantial position in foreign securities to support yield and risk management strategies.

The central bank’s total balance sheet, measured at Dhs972.3 billion, shows layered components across both liabilities and assets. On the liability side, current and deposit accounts account for Dhs449.1 billion, monetary bills and Islamic certificates amount to Dhs279.9 billion, currency in circulation is Dhs165.2 billion, other liabilities total Dhs33.2 billion, and capital and reserves register at Dhs45 billion. On the asset side, cash and bank balances stand at Dhs210.9 billion, deposits at Dhs208 billion, investments total Dhs516.8 billion, loans and advances are a modest Dhs0.5 billion, and other assets total Dhs36.2 billion.

This balance-sheet structure underscores several important implications:

• A robust foreign asset position provides the central bank with flexibility to intervene in domestic markets or support the currency in times of stress. The continued growth in foreign assets, while moderate, indicates a deliberate stance to diversify holdings and maintain external resilience.

• The asset mix shows a prudent balance between cash-like holdings and longer-term investments. The sizable investment portfolio supports risk management and potential yield generation, which can help stabilize reserve adequacy without compromising liquidity.

• The strong liability framework, with substantial current and deposit accounts alongside a sizeable base of monetary bills and certificates, indicates a well-capitalized and liquid funding base. This is essential for the central bank’s capacity to implement monetary policy operations and to act as a lender of last resort if needed.

• The relatively small share of loans and advances on the asset side of the balance sheet suggests that the central bank’s primary role remains liquidity provision, monetary transmission, and balance-sheet management rather than industrial lending. The emphasis on deposits, bills, and investments aligns with standard central bank practice for maintaining monetary stability and financial system soundness.

Overall, the central bank’s external and internal balance-sheet posture in April 2025 points to a measured approach that prioritizes liquidity, reserve adequacy, and policy flexibility. This stance complements the broader domestic credit growth and deposit dynamics, helping to anchor financial stability as the UAE economy pursues steady growth in a dynamic global environment.

Implications for policy, banks, borrowers, and the economy

The April 2025 data set reveals a bank funding environment that remains ample, with deposits providing a steady base for lending while the central bank manages liquidity through a diversified instrument mix. The combination of growing total assets, modest but positive credit expansion, and a resilient deposit base suggests that banks are positioned to continue supporting both government-led projects and private sector activity.

Key implications include:

• For banks: The sustained deposit growth, particularly from non-residents, enhances funding diversity and can support continued lending. Banks may continue to favor high-quality borrowers, including government-related entities and stable private-sector clients, while maintaining caution in segments such as non-banking financial institutions. The renewed emphasis on liquidity management and instrument diversification—evidenced by the base money dynamics and the central bank’s balance-sheet posture—helps banks weather potential volatility and sustain credit flows.

• For borrowers: The credit expansion, especially toward the government sector and public entities, indicates ongoing public-finance-driven investment that can stimulate demand and create opportunities for private contractors and suppliers. Private-sector lending growth, while more moderate, remains positive and supportive of business expansion and consumer credit. If credit conditions remain favorable, the UAE economy could see persistent investment activity along with continued consumer spending.

• For policymakers: The data reinforce the role of liquidity management and targeted credit support as levers for macroeconomic stability. The balance between M1 strength and a controlled M2 movement highlights the importance of maintaining a liquidity channel that supports transactional activity while avoiding excess quasi-money pressure. The central bank’s foreign-asset diversification also provides policy space for currency stability and external financing resilience.

• For the broader economy: Deposits’ resilience—particularly the solid growth in resident deposits and the strong uptick in non-resident funds—suggests confidence in the UAE financial system on the international stage. This can bolster investor sentiment and support ongoing capital inflows, which are critical for financing growth in a rapidly expanding economy.

In summary, the April 2025 banking data indicate a stable, well-funded sector with a clear emphasis on prudent risk management and policy-driven liquidity support. The interplay between government-led lending, private-sector credit, and deposit dynamics points to a balanced trajectory that can sustain growth while ensuring financial sector robustness.

Conclusion

The UAE’s banking sector in April 2025 demonstrated resilience and balanced expansion across assets, lending, and liquidity. Total assets surpassed Dhs4.749 trillion, marking an increase from March, while total bank credit rose to over Dhs2.259 trillion, driven by domestic and foreign lending growth. Domestic lending to the government, public sector, and private sector expanded, even as credit to non-banking financial institutions declined. Deposits grew by 1 percent to exceed Dhs2.965 trillion, supported by modest gains in resident deposits and a substantial rise in non-resident deposits, underscoring continued funding flexibility for banks.

Monetary aggregates revealed a nuanced liquidity stance: M1 advanced, M2 slipped slightly, and M3 posted a modest gain, with government deposits contributing to the positive movement in M3. The monetary base, though down, benefited from strong increases in current accounts and overnight deposits at the central bank, illustrating the central bank’s active management of liquidity. In parallel, foreign assets rose modestly, reinforcing the central bank’s external liquidity position, while its balance sheet maintained a stable and diversified profile.

Taken together, these indicators reflect a well-functioning UAE financial system capable of sustaining lending and investment activity while preserving liquidity and financial stability. The central bank’s foreign asset position and balance-sheet composition provide flexibility to respond to emerging macroeconomic conditions, while banks’ funding and liquidity- management capabilities continue to support ongoing growth trajectories in both government-led and private-sector projects. As the UAE economy navigates evolving global conditions, the April 2025 data underscore a banking sector that remains in a strong position to support orderly credit creation, deposit mobilization, and prudent risk oversight.