UAE Central Bank support package enables AED 13.5bn in loan deferments, NPLs fall to record lows
UAE Central Bank support package deferred AED13.5bn in loan repayments for 135,031 clients; NPLs fell to 2.8% while banking assets and deposits rose in H1 2026.
The Central Bank of the UAE’s proactive support package, adopted in March 2026, has allowed banks to grant deferments on loan repayments totaling AED 13.5 billion to 135,031 clients as part of a precautionary strategy to strengthen financial-sector resilience. The relief measure, described by the central bank as an anticipatory approach to asset-quality management, was in place to help borrowers facing temporary cash-flow pressures without undermining overall stability. Data published by the central bank show the scheme’s impact across households, small and medium enterprises, and large corporates as of July 30, 2026.
Support package delays AED 13.5bn in loan repayments
The deferment programme covered AED 13.5 billion in loans and was activated under the central bank’s framework to enhance the resilience of financial institutions. Banks reported that 135,031 customers benefited from payment pauses or restructuring options designed to ease immediate obligations while preserving credit relationships. The central bank emphasized the temporary and targeted nature of the relief, aimed at preventing short-term shocks from crystallizing into long-term non-performing exposures.
Breakdown of beneficiaries by client type
As of July 30, 2026, the largest share of deferred loan value was for major corporate borrowers, amounting to AED 9.1 billion, while small and medium enterprises received AED 2.4 billion in deferments. Individuals benefited from AED 2.0 billion of deferred repayments, with 127,753 retail clients included in the programme’s caseload. The tally of corporate beneficiaries stood at 1,080 and SMEs at 6,198, reflecting a broad distribution of support across the economy.
Banking balance-sheet growth through mid-2026
The central bank’s mid-year figures show continued expansion in the UAE banking system, with total assets increasing by 12.5% and loan books rising 18.1% as of June 30, 2026 compared with the same period in 2025. Deposits also rose by 14.0% over the same interval, underlining strong funding inflows and liquidity within the sector. These trends suggest that the support package has been implemented alongside robust balance-sheet growth, allowing banks to maintain lending activity while managing credit risks.
Non-performing loans decline to lowest recorded level
Asset-quality metrics improved markedly in the second quarter of 2026, with the ratio of non-performing loans (NPLs) falling to 2.8%, the lowest level recorded in recent history and a significant decline from 8.2% reported in 2020. Net NPLs – after provisions and write-offs – reached a record low of 1.3%, down from 3.6% in 2020, highlighting the reduction in credit risk on bank balance sheets. The absolute stock of impaired loans declined to AED 76 billion by the end of Q2 2026, down from AED 84 billion at the end of Q1 and substantially lower than the AED 142 billion recorded in 2020.
Regulatory and supervisory measures credited for improvements
The central bank attributed the improvement in asset quality to a suite of supervisory measures, including intensive inspections, comprehensive asset-quality reviews, and enhanced dialogue with banks’ risk management teams. Regulators said these actions were complemented by the adoption and enforcement of stronger credit-risk management standards and updated guidelines on debt write-offs and recoveries aligned with international best practices. The combined approach aimed to ensure timely identification of problem loans, adequate provisioning and effective remediation, while preserving the capacity of banks to support economic activity.
Sector implications and outlook for lending resilience
Authorities and industry participants say the twin outcomes of reduced NPLs and expanding balance sheets bolster confidence in the UAE’s banking system and its capacity to sustain credit flows to the economy. The central bank’s precautionary stance — using supervised deferments rather than broad forbearance — appears intended to strike a balance between borrower relief and the preservation of credit discipline. Looking ahead, continued monitoring of credit quality, provisioning adequacy and macroeconomic conditions will be central to maintaining the gains achieved in the first half of 2026.
The central bank’s reported data underscore a banking system that has absorbed targeted relief measures while recording stronger assets, loans and deposits and a measurable reduction in impaired exposures. Policymakers and lenders will now focus on ensuring that deferred repayments translate into sustainable recoveries and that the sector’s capital and provisioning buffers remain aligned with evolving risks.
