Al Ramz Capital reports that the UAE’s leading banks maintain strong capital, liquidity, and asset quality, bolstered by a US-Iran ceasefire that has eased geopolitical tensions and restored foreign investor confidence. While direct exposure to conflict-sensitive sectors—such as real estate, aviation, and trade finance—comprises roughly 23%–27% of gross loans, the firm considers these levels manageable.
The primary concern lies in “second-order” risks. A prolonged conflict or economic slowdown could weaken employment and real estate sentiment, potentially straining personal and mortgage portfolios. The analysis suggests that FAB and ADCB are better insulated due to their higher public sector exposure, whereas ENBD, ADIB, and DIB are more vulnerable to retail-side shocks. ADIB, in particular, faces the most sensitivity due to its heavy focus on home and personal finance.
Despite these challenges, lending and deposits are expected to remain stable, supported by sufficient liquidity from the UAE Central Bank’s relief measures. Analysts noted that because the full impact of recent disruptions was limited to March, the situation currently resembles a temporary “flow shock” rather than a deep quarterly decline. While ratings remain steady, Al Ramz emphasizes that future performance will depend on Q1 data and management’s clarity regarding loan growth and risk costs.
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