UAE Bank Assets Reach $1.6T as Credit Growth Outruns Deposits

The Central Bank of the UAE issued its quarterly review of monetary, banking and financial market developments on Wednesday. It put gross bank assets at $1.6 trillion (AED 5.8 trillion) at the close of the third quarter of 2026, a 4% gain on the previous three months and 11.8% above the same point a year earlier.

Lending ran ahead of funding. Gross credit expanded 5.5% during the quarter to $791.8 billion (AED 2.9 trillion), lifting annual growth to 17.3%. Total deposits climbed 2.7% to $971.5 billion (AED 3.6 trillion), up 12% year on year.

Resident deposits increased 2.2% over the quarter to roughly $885 billion (AED 3.3 trillion). Money booked by non-residents moved faster, rising 9.1% to $86.6 billion (AED 317.9 billion). Government-related entities supplied about 1.4 percentage points of the resident-deposit increase, and the private sector added 0.6 percentage points.

That split matters for how the system pays for its loan book. Deposit gathering is leaning on state-linked companies and cross-border balances rather than on household and corporate money, which is the stickier and generally cheaper source of funding. A funding base that shifts with government placement decisions and with sentiment abroad behaves differently in a squeeze than one built on private savings.

A single month of the quarter

September carried much of the quarterly move. Gross assets rose 1.3% month on month to the same $1.6 trillion. Gross credit also added 1.3%, reaching $791.8 billion, while domestic credit climbed 1.6% to about $627.6 billion (AED 2.3 trillion).

Bank deposits advanced 0.9% during the month, from about $962.6 billion at the end of August to $971.5 billion at the end of September. Resident deposits gained 0.6% to $885 billion, and non-resident deposits rose 4.1% to $86.6 billion. Placements from government-related entities were 9.6% higher at $103 billion (AED 378.2 billion), accounting for roughly 1 percentage point of monthly resident-deposit growth. Deposits from other financial corporations rose 7.2% to $18 billion (AED 66.2 billion). Private-sector deposits held at $638.5 billion (AED 2.3 trillion) and government-sector deposits at $125.4 billion (AED 460.4 billion), both unchanged.

Money supply and the central bank's balance sheet

M3, the broadest measure of money in the UAE, rose 1.2% in September to $955.2 billion (AED 3.5 trillion). A 4.5% monthly increase in government-sector deposits, which reached $155.2 billion (AED 570.1 billion), supported the gain. M2 — currency in circulation plus demand, time and savings deposits — grew 0.6% to more than $800 billion (AED 2.9 trillion). M1 stood at $278.3 billion (AED 1.02 trillion), consisting of $44 billion (AED 161.6 billion) in currency circulating outside banks and $234.4 billion (AED 860.7 billion) in monetary deposits.

The monetary base was $218.4 billion (AED 801.9 billion). Reserve balances that banks hold with the central bank jumped 31.3% month on month to $83 billion (AED 304.7 billion). Foreign assets of the CBUAE reached $260.4 billion (AED 956.2 billion) at the end of September.

Asset quality steady, with a caveat

Credit quality held through the second quarter of 2026. The non-performing loan ratio was broadly stable at 2.3%, a historically low level, and cost of risk improved 22 basis points from the prior quarter to 0.35%, according to a September assessment of the sector. Lower provisions at the five largest banks — First Abu Dhabi Bank, Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank and Mashreq Bank — drove most of that improvement, and the authors cautioned that it did not necessarily signal better underlying asset quality. The coverage ratio slipped marginally to 108.8%.

Sam Gidoomal, managing director and head of Middle East financial services at Alvarez & Marsal, said on September 21 that UAE banks turned in mixed second-quarter results, marked by continued balance-sheet expansion, resilient asset quality and solid capital buffers. He also said geopolitical tensions and the business disruption they cause had heightened concern about asset-quality deterioration and heavier credit provisioning in the second half of 2026.

Funding abroad gets harder

Fitch Ratings expects GCC banks to issue about 30% less US dollar debt in 2026, pointing to weaker credit growth, geopolitical uncertainty and higher borrowing costs in an October 6 report. GCC lenders raised about $59 billion in the first nine months of the year, against a record $102 billion for all of 2025. Yields on five-year GCC bank bonds and sukuk have risen 170 basis points since the regional conflict began, with roughly 150 basis points of that traced to higher US Treasury yields.

UAE banks were the exception. Their US dollar issuance in the first nine months was 43% higher year on year, helped by strong senior unsecured deals as sector liquidity tightened slightly. UAE institutions took 32% of GCC issuance in the period, nearly double their 17% share in 2025. Saudi banks' share fell to 37% from 55%.

The two halves of the picture meet in the funding line. UAE lenders are growing credit at nearly one and a half times the pace of deposits, and they have leaned on dollar markets that are now expected to shrink for the region as a whole. How long that combination holds depends on whether government-related and non-resident deposits keep arriving at September's rate.