Media ININ Economy We Trust
Media in Abu Dhabi 06-05-2109
The national banks’ solvency in the UAE continued to rise to levels that were the highest in more than three years. The capital adequacy ratio of these banks (Tier 1 plus Tier 2 / 17.5%) reached the end of March 2019.
The rise in the capital adequacy ratio of the national banking system was accompanied by a rise in the capital adequacy ratio of the first segment from 16% at the end of 2018 to 16.3% in March.
As banks achieve this ratio of capital adequacy, they have strengthened their financial solvency and exceeded the requirements of the central bank and standards imposed by international financial institutions.
In accordance with the Central Bank’s guidelines issued earlier, the capital adequacy ratio (Tier 1 + Tier 2) for the period from December 2017 is calculated in accordance with the Basel III principles, which are the latest globally approved standards in the Financial Action Board.
The size of the combined effects of changes in loans and deposits is one of the most important indicators to indicate the financial solvency of the banking system. Two main ratios are observed in terms of bank financing: loan to deposit ratio and lending to stable financial resources.
Loans to deposits ratio reached 96% during the first quarter of this year. Liquid assets accounted for 16% of total assets.
The ratio of liquid assets includes the mandatory reserve of banks in accordance with the applicable instructions and certificates of deposits held by the Central Bank, in addition to excess reserves, weighted government bonds with a zero risk level, public sector debt and cash in banks according to the standards imposed by the Central Bank.
