More than 65,000 business and individual customers across the UAE have availed loan deferrals, interest relief and fee waivers worth Dh6.2 billion ($1.69 billion) to offset the economic impact of the Iran war.
Hospitality, transport and tourism businesses have been the biggest beneficiaries of the lifeline the Central Bank of the UAE (CBUAE) has extended through lenders in the UAE, the latest data from the regulator showed on Friday.
As of May 1, a total of 60,559 individual customers, 4,335 small and medium enterprises (SMEs) and 485 companies from the country’s corporate sector have taken concessions and deferrals offered by the commercial lenders, CBUAE said in a statement on Friday.
Businesses in the transport sector sought the most assistance from commercial banks, with 361 companies benefiting from the concessions on offer. More than 170 companies from the tourism sector and 134 from the entertainment industry were also supported by banks through the CBUAE’s Financial Institutions Resilience Package.
The US-Israeli war on Iran, which began on February 28, has disrupted business across the region. Iran has launched waves of drones and missiles at Arab nations across the region.
Hospitality, aviation, transport and entertainment are among the worst-hit sectors. The UAE has faced the most intense barrage of Iranian attacks, with thousands of drones and hundreds of cruise and ballistic missiles launched at civilian targets.
The UAE was again attacked by Iran this week, and the Defence Ministry said air defence systems were activated on Friday to deal with aerial threats from Iran.
The package
The CBUAE on March 18 approved a resilience package to reinforce the stability of the banking sector against the backdrop of the war in the Middle East. The package is aimed at supporting the UAE banking sector in “light of exceptional global and regional circumstances”, the regulator said at the time.
It allows lenders to access liquidity and provides them with the flexibility to use capital buffers to support the UAE economy. In view of the extraordinary circumstances, banks were directed to provide the required financing services to support their customers and the national economy.
“The CBUAE’s precautionary policies and proactive frameworks have consistently demonstrated their effectiveness in promoting the resilience and preparedness of the financial and banking sector, while ensuring monetary and financial stability,” said Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister, Chairman of the Presidential Court and Chairman of the CBUAE board, said at the time.
Continued growth
The resilience package is backed by the CBUAE’s foreign exchange reserves of more than Dh1 trillion. The regulator affirmed the strong fundamentals of the country's Dh5.4 trillion banking sector.
On Friday, the regulator said that the banking sector is in a good state and has continued to grow despite the uncertainties caused by the war. Total banking assets in the country have grown by 2.1 per cent, while loans and deposits have risen 3.2 and 1.9 per cent respectively over the course of the conflict, from March 1 to May 1.
The monetary base cover ratio – a measure of financial stability – has also hit 115.3 per cent, over that time period, according to the CBUAE social media post.
The regulator said affected customers were allowed six months of loan deferrals as well as suspension of interest and fees on some loan facilities. Banks have also ensured continuity of credit financing for priority sectors, it added.
