Reaffirm his commitment to support recovery
The Central Bank: Gradually withdraw support packages... and at the appropriate time
The Central Bank affirmed that the country's financial system is stable as a result of the continued economic recovery.
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Khaled Balama: “As we are heading into the post-pandemic recovery phase, there will be less need for exceptional support packages.”
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The Central Bank stated that it will start a gradual, deliberate and timely withdrawal of the support packages, which it issued within the targeted comprehensive economic support plan, so as not to negatively affect credit transactions and economic growth, noting that this comes in light of the gradual improvement of economic activity.
And the “Central” stressed, during its meeting with the CEOs of banks, that it continues its commitment to support recovery, while the participants in the meeting unanimously agreed on the effectiveness of the plan in achieving its goals of mitigating the negative effects of the “Covid-19” pandemic on the country’s economy, as 15% of the Loan portfolios with banks from the loan repayment deferral program included in the economic support plan.
A statement issued yesterday stated that the Governor of the Central Bank, Khaled Muhammad Balama, held a meeting with the CEOs of a number of national and foreign banks operating in the country, in the presence of the Chairman of the Board of Directors of the Emirates Banks Federation, Abdulaziz Al Ghurair.
Discussions focused on the Central Bank’s assessment of the financial stability in the country, in addition to the Central Bank’s plans to gradually withdraw the exceptional support packages it had launched.
The Governor discussed with the banks the latest assessment conducted by the Central Bank on financial stability, stressing that the financial system of the UAE is stable, as a result of the continued economic recovery.
Balama said: “Our assessment, confirmed by recent economic data, shows the continuation of the gradual recovery of the UAE economy,” adding: “As we are approaching the post-pandemic recovery stage, there will be less need for exceptional support packages, and we expect the banks to play their role in supporting the recovery.” economy, and ensuring the continued flow of funds to creditworthy individual and corporate borrowers.
The Central Bank confirmed that in the short term, it will keep the reduced reserve requirements of banks, and the level of the loan-to-value ratio currently applied to mortgage loans granted to home buyers for the first time, temporarily unchanged.
The Central Bank had announced earlier that the loan repayment deferral program would stop by the end of this year, while the Central Bank’s zero-cost lending facilities would continue to be used in granting new loans until mid-2022.
It is noteworthy that the Central Bank announced in advance that its measures to ease regulatory requirements that allow banks to maintain lower capital buffers and reserve liquidity will expire at the end of 2021.
The Central Bank will closely monitor the economic recovery and the demand for loans, and may consider extending these measures for a limited period to ensure the continuity of the economic recovery.
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