Investments in UAE banks reach AED 742.9 billion in January, recording a 16.1% yearly growth
The UAE banking sector concluded January 2025 with a significant boost, as total investments surged by 16.1%. This impressive growth was driven by a combination of factors, including strong economic growth, increased lending and non-interest income, and strategic investments in technology and expansion by major banks.
By the end of January, the sector's assets stood at AED4.562 trillion, marking an 11% year-on-year increase and a modest 0.1% uptick from December. Deposits in the banking sector rose 11.8% annually to surpass AED2.84 trillion.
The UAE Funds Transfer System (UAEFTS) processed a total of AED1.786 trillion in January, marking a 18% increase. Held-to-maturity bonds stood at AED335.7 billion, up 7.9% year-on-year but down slightly by 1.1% from December 2024.
Cheques cleared through image-based systems totalled AED118.48 billion, across nearly 2 million cheques. Other investment categories climbed 13.2% year-on-year and 2.2% month-on-month to reach AED55.8 billion. Total credit extended by banks reached AED2.186 trillion, up 9.5% from the previous year. AED1.109 trillion of the total was from interbank transfers.
Cash withdrawals from the Central Bank amounted to AED19.929 billion. Debt securities held by banks rose to AED332.3 billion, marking a 26.1% annual increase. Equity investments posted a strong 19.4% year-on-year gain, settling at AED19.1 billion despite a 1.5% dip over the month. Customer transactions accounted for AED677.64 billion.
One of the key contributors to the surge in investments was robust loan growth and broad-based income increases. Banks like Mashreq reported double-digit growth in loan volumes and a 55% surge in investment income, along with a 56% rise in other income streams even amid a softening interest rate environment.
First Abu Dhabi Bank (FAB) also recorded a 41% annual rise in non-interest income driven by fees, commissions, forex, and investment income, combined with a 14% growth in total assets and 11% increase in loans and Islamic financing.
The expansion of financial activity and business establishment played a significant role as well. Dubai International Financial Centre (DIFC) saw a 25% increase in active registered companies and a surge in professionals working there, indicating an increasingly vibrant and attractive financial ecosystem.
Banks also invested strategically in digital infrastructure and technology to support growth and expansion domestically and internationally. Entities like Dubai Investments showed strong profitability driven by real estate sector demand and ongoing projects, underpinning bank investment portfolios linked to these sectors.
Together, these factors reflect a combination of solid underlying economic fundamentals, increased market confidence, and technology-driven capacity expansion, fueling the rise in bank investments by 16.1% in early 2025 within the UAE financial sector. Financial activity across key segments in the UAE is expanding, as reflected by these figures, with the total bank investments in the UAE reaching AED742.9 billion in January 2025.
- The strong growth in the UAE banking sector could encourage individuals to focus more on personal-finance matters, considering the increased availability of credit and rising investments in technology.
- The robust surge in non-interest income for banks like Mashreq and First Abu Dhabi Bank (FAB) might entice investors in the health sector, as these funds could potentially lead to strategic investments in healthcare facilities and services.
- The UAE's thriving business ecosystem, evident in the 25% increase in active registered companies at Dubai International Financial Centre (DIFC), creates a conducive environment for investment not only in banking and finance but also in other sectors such as technology and health, stimulating the overall economic growth.
