The aggregate capital and reserves of banks operating in the country grew at a faster pace year-on-year in the second quarter of 2018 to reach Dh330.2 billion, according to the latest Central Bank of the UAE data.
The total capital and reserves of the lenders rose by 4.4 per cent at the end of the three-month period to June 30, compared to a 1.5 per cent increase at the end of the corresponding period in 2017, state news agency WAM reported, citing statistics from the banking regulator.
The capital adequacy ratio (CAR) during the period climbed by 3.4 per cent, in contrast to a decrease of 0.5 per cent reported at the end of the second quarter last year. Lenders continued to remain well above the required 12.38 per cent CAR, which includes the 1.88 per cent capital conservation buffer requirement, and the 8.5 per cent Tier 1 ratio stipulated by the Central Bank in compliance with Basel III guidelines.
UAE Banks are following Basel III requirements for calculating the CAR, which became effective at the end of last year, the Central Bank said.
The CAR measures the amount of a bank's capital expressed as a percentage of its risk-weighted credit exposures. Higher CAR signifies more protection for the depositors and is indicative of stability of the financial system in an economy.
Lenders are expected to perform better this year as the country's economy recovers from a three-year oil price slump. The Central Bank is also optimistic about the UAE's economic prospects as it raised its growth forecast for this year to 2.7 per cent in May from its previous projection of 2.5 per cent.
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The regulator cited expansion in the non-oil sector for the revised projection for the full year despite slower year-on-year growth in the first quarter.
The latest CentralBank data also showed a 1.1 per cent rise in total assets of UAE lenders to Dh2.75 trillion at the end of the second quarter, compared to a 0.2 per cent rise recorded a year earlier.
Gross credit increased by 0.9 per cent at the end of June, reaching Dh1.622tn. On an annual basis, gross credit increased by 3.4 per cent.
By the end of the second quarter of 2018, total deposits of resident and non-resident customers with banks operating in the UAE increased by 1.3 per cent, reaching Dh1.684tn, compared to a drop of 0.8 per cent to Dh1.59tn at the end of the second quarter of 2017.
Resident deposits also rose by 1.4 per cent to Dh1.49tn at the end of the second quarter, compared to a decline of 0.3 per cent in the corresponding period. Non-resident deposits, however, decreased by 0.3 per cent to Dh190bn by the end of June 2018, compared to a 4.9 per cent dip at the end of the same period in 2017
