The UAE banking sector witnessed robust growth throughout 2025, with a significant surge in banking assets. This positive trend reflects the nation’s strong economic performance and the increasing confidence in its financial institutions. This article delves into the details of this growth, analyzing the key factors driving the expansion of banking assets and its implications for the broader economy.
Significant Growth in Banking Assets in 2025
According to the Central Bank of the UAE’s monetary and banking developments report for December, banking assets increased by over AED 780 billion during the year, reaching approximately AED 5.34 trillion by the end of December 2025. This represents a substantial increase compared to the AED 4.56 trillion recorded at the end of December 2024. The growth demonstrates the resilience and dynamism of the UAE’s financial sector.
On a monthly basis, banking assets experienced a 1.7% rise in December 2025 compared to the end of November of the same year, indicating a sustained upward trajectory. This consistent growth is a positive indicator for the overall economic health of the country.
Expansion of Banking Credit
Total banking credit also saw a considerable increase in 2025, reaching approximately AED 2.57 trillion by the end of December, up from AED 2.18 trillion at the end of December 2024. This translates to an annual increase of nearly AED 390 billion. This expansion in credit availability is crucial for supporting business investment and economic activity.
Drivers of Credit Growth in December 2025
During December 2025, credit growth reached 1.5% compared to the end of November. Approximately two-thirds of this growth was fueled by a rise in foreign currency lending, amounting to AED 25.8 billion. Local currency lending contributed around AED 11.6 billion to the overall increase.
The growth in local currency credit can be attributed to several factors, including a 0.6% increase in lending to the private sector, an 1.8% rise in credit to entities associated with the government, and a significant 10.9% growth in credit directed towards other financial institutions. However, lending to the government sector experienced a decline, partially offsetting these gains. This diversification in credit allocation is a healthy sign for the banking sector.
Increase in Bank Deposits
Alongside the growth in assets and credit, bank deposits also experienced a substantial increase. They rose to approximately AED 3.307 trillion by the end of December, up from AED 2.85 trillion at the end of December 2024, representing an annual growth of around AED 433 billion. This increase in deposits provides a solid foundation for further lending and investment.
Monthly and Segmented Deposit Growth
On a monthly basis, bank deposits increased by 2.2% in December 2025 compared to the end of November. This growth was driven by a 1.3% increase in resident deposits and a significant 12.2% rise in non-resident deposits.
Within resident deposits, the private sector saw a 2.8% increase, while deposits from entities associated with the government rose by 4.8%, and deposits from other financial institutions increased by 12.9%. Conversely, government sector deposits decreased by 10.4%. These varied trends highlight the shifting dynamics within the deposit base. Financial stability is clearly being supported by these trends.
Money Supply and Liquidity Indicators
The Central Bank also reported on the evolution of the money supply. M1 money supply increased from approximately AED 1.048 trillion in November to AED 1.071 trillion in December, representing a growth of 2.2%, supported by increases in currency in circulation and demand deposits. M2 money supply rose from AED 2.67 trillion to AED 2.75 trillion, a growth of 3.2%, driven by a AED 62 billion increase in quasi-money deposits. M3 money supply increased from AED 3.216 trillion to AED 3.255 trillion, achieving a growth of 1.2%, despite a decline in government sector deposits.
Furthermore, the monetary base increased by 5.4% in December 2025 compared to the end of November, reaching approximately AED 895.7 billion. This was driven by a 1.9% increase in issued currency and a 63.4% rise in current accounts and overnight deposits of banks and other financial institutions with the Central Bank. However, reserve accounts decreased by 9.1%, while currency and Islamic certificates of deposit remained relatively stable. These indicators point to increased liquidity in the market.
Conclusion: A Positive Outlook for the UAE Banking Sector
The substantial growth in banking assets throughout 2025, coupled with increases in credit, deposits, and money supply, paints a positive picture of the UAE’s financial sector. The continued expansion reflects the nation’s economic strength and its ability to attract both domestic and international investment. The diversification of credit and deposit growth across different sectors further strengthens the resilience of the banking system.
Looking ahead, maintaining this momentum will require continued monitoring of global economic conditions and proactive measures to ensure financial stability and sustainable growth. Further analysis of these trends will be crucial for policymakers and investors alike. For more detailed information, refer to the Central Bank of the UAE’s official reports and publications.