RIYADH, July 17 (Arab News): UAE banks' external assets rose 3.1 per cent in 2022 amid a significant increase in cross-border exposure, according to the country's central bank.
The institution's Financial Stability Report for last year showed that such holdings accounted for 39.4 per cent of all consolidated assets in the sector.
Of that, local operation cross-border assets made up 24.5 per cent of holdings, with foreign branches and subsidiaries' assets accounting for the remaining 14.9 per cent.
The cross-border exposures from UAE entities came amid ample credit capacity, economic recovery, and robust funding conditions, the report revealed.
It went on to disclose that Saudi Arabia is among the top five countries in terms of the total assets of subsidiaries and branches of UAE banks abroad. The US led the way, followed by Turkiye, the UK, Egypt, and then the Kingdom.
Towards the end of 2022, the cross-border assets amounted to 1 trillion dirhams ($272 billion), the report indicated.
The UAE banking system's external liabilities accounted for 29.9 per cent of total consolidated assets last year, reflecting a 2.3 per cent drop when compared to 2021. While local operations accounted for 18.9 per cent of the total consolidated assets, foreign branches and subsidiaries accounted for 11 per cent.
The decline in external liabilities was mainly due to the drop in capital market funding, contraction in non-resident deposits and ample funding conditions in the country, the report noted.
As of the end of 2022, the net cross-border interbank lending position of UAE banks accounted for 2.6 per cent of total assets, cementing their position as net lenders in the global interbank market. The report also indicated that the global footprint of UAE banks included more than 20 countries following several cross-border acquisitions in recent years.
In May, global professional services firm Alvarez & Marsal reported that the UAE's banking sector recorded a 35 per cent growth in net profits to 18.3 billion dirhams during the first quarter of 2023.
"This has been a very strong quarter for the UAE banks. We expect that for the balance of the year, the UAE banking sector will maintain the gains of the first quarter," said Asad Ahmed, managing director and head of the Middle East financial services at Alvarez & Marsal, in a statement at the time.
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