UAE non-performing loans at record low: Central Bank 

Abu Dhabi: The Central Bank of UAE said non-performing loans (NPLs) in the country’s banking sector have fallen to unprecedented levels, a sign of the system’s resilience and strong financial health.

According to the central bank’s latest financial soundness indicators, the share of NPLs relative to total loans has steadily declined over the past two years, dropping from 6.8 percent in the third quarter of 2022 to just 3.4 percent in the second quarter of 2025. The improvement marks a more than 44 percent reduction in troubled loans.

In terms of value, NPLs decreased from Dh131.2 billion  in Q2 2023 to Dh91 billion in Q2 2025. 

Quarter-on-quarter, the figure was down 3.55 percent from the first quarter of this year. Provisions covering these loans also eased, with the coverage ratio dipping to 57.3 percent at the end of June 2025, compared to 60.6 percent three months earlier. The total value of provisions fell by Dh5 billion to Dh52.1 billion.

The decline in bad loans has coincided with rising profitability. Net income after tax across the banking sector rose to Dh86.1 billion in the second quarter of 2025, up from Dh81.5 billion in the previous quarter and Dh78.1 billion in the same period a year earlier. Pre-tax income also grew to Dh98 billion.

Liquidity indicators showed similar strength. Liquid assets climbed to Dh871.3 billion, representing 17.7 percent of total banking assets, which reached Dh4.92 trillion at the end of Q2. 

While slightly lower as a percentage of total assets compared to the previous quarter, the absolute value of liquid assets rose by nearly 2 percent.

Capital adequacy remained comfortably above international standards. The overall capital adequacy ratio stood at 17.3 percent, far exceeding the Basel III minimum requirement of 13 percent.