The UAE banking sector ended the second quarter of 2026 with its best asset quality figures on record, according to data published by the Central Bank of the UAE.
The non-performing loan ratio fell to 2.8 per cent, down from 8.2 per cent in 2020 and the lowest level the regulator has ever recorded. The net non-performing loan ratio dropped to 1.3 per cent over the same period, compared with 3.6 per cent six years earlier.
In absolute terms, the stock of non-performing loans stood at AED 76 billion at the end of Q2 2026, down from AED 84 billion in the first quarter of this year and AED 142 billion in 2020.
Alongside the asset quality figures, the CBUAE released data on a proactive support package it adopted in March 2026 in response to conditions affecting financial institutions.
The package enabled instalment repayment deferrals on loans totalling AED 13.5 billion, covering 135,031 customers. The bulk of the deferred value sat with large corporates at AED 9.1 billion, followed by small and medium-sized enterprises at AED 2.4 billion and individuals at AED 2 billion.
By customer count, however, individuals made up the vast majority of beneficiaries at 127,753, with 6,198 SMEs and 1,080 large corporates also covered.
Broader sector indicators pointed in the same direction. As of 30 June 2026, banking assets had grown 12.5 per cent year on year, loans 18.1 per cent, and deposits 14 per cent.
The CBUAE attributed the improvement in loan quality to a combination of regulatory interventions: intensive on-site inspections, comprehensive asset quality reviews, closer engagement with bank risk officers, and the implementation of updated credit risk management standards. The regulator also developed guidelines for the write-off and recovery of non-performing loans aligned with international best practices.
