The Central Bank of the UAE published an update showing that banking sector asset quality reached its strongest recorded levels at the end of the second quarter of 2026. The nonperforming loan ratio fell to 2.8% from 8.2% in 2020, while the net nonperforming loan ratio declined to 1.3% from 3.6%. The stock of nonperforming loans decreased to AED 76 billion from AED 142 billion over the same period. The central bank attributed the improvement to systemwide asset quality reviews, targeted supervision, engagement with banks and risk officers, implementation of its Credit Risk Management Regulation and Standards, and guidance on loan write-offs and recoveries. Its Financial Institutions Resilience Package, adopted in March 2026, has enabled repayment deferrals on about AED 13.5 billion of loans for 135,031 customers temporarily affected. Banking sector loans, deposits and assets increased by 12.5%, 18.1% and 14%, respectively, as of June 30, 2026, compared with the same period in 2025.
Central Bank of the UAE2026-07-30
Central Bank of the UAE reports record-low 2.8% banking sector nonperforming loan ratio
The Central Bank of the UAE reported a record-low nonperforming loan ratio of 2.8% for the second quarter of 2026, while the net ratio fell to 1.3%. Nonperforming loans declined to AED 76 billion, supported by targeted supervision and tighter credit risk oversight. A resilience package has also provided repayment deferrals on about AED 13.5 billion of loans.