Gulf equities gain, UAE banks rise on central bank’s package

Most Gulf equities closed higher on Wednesday, with UAE markets lifted by financial stocks after the country’s central bank launched ‌a resilience package, helping investors claw back some losses due to the Iran ​war and wider Middle East conflict.

Dubai’s main share index rose as much as 3.4 before concluding 0.8% higher, helped by a 4.4% rise in blue-chip developer Emaar Properties .

Elsewhere, MashreqBank advanced 4.8%. However, top lender Emirates NBD - which surged more than 9% - closed 0.9% higher.

Chaired by His Highness Sheikh Mansour Bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Board of Directors of the Central Bank of the UAE (CBUAE), the Board held its second meeting of the year on Tuesday.

The Board noted that the UAE’s financial system has demonstrated resilience during the current extraordinary circumstances affecting the global and regional markets without any material impact on the banking sector’s health and payment systems.

Sheikh Mansour Bin Zayed emphasised the role of the UAE’s vision in shaping the nation’s strength, including its economic and financial landscape. He affirmed: “The UAE’s enduring financial and economic strength is rooted in the forward-looking vision of the UAE’s leadership. The CBUAE’s precautionary policies and proactive frameworks have consistently demonstrated their effectiveness in promoting the resilience and preparedness of the financial and banking sector, while ensuring monetary and financial stability. These achievements are a testament to the sustained confidence in our system and the global competitiveness of the UAE’s national economy”.

The meeting was attended by the Vice Chairmen of the Board, Abdulrahman Saleh Al Saleh and Jassem Mohamed Bu Ataba Al Zaabi, along with Khaled Mohamed Balama, Governor of the CBUAE. Also in attendance were Board Members Younis Haji Al Khoori, Sami Dhaen Al Qamzi, and Dr. Ali Mohamed Al Rumaithi, in addition to Assistant Governors: Ahmed Saeed Al Qamzi and Ibrahim Al Sayed Mohamed Al Hashemi.

The UAE central bank said on Tuesday it had approved a broad financial resilience package to strengthen the stability of the country’s banking sector.

The central bank said UAE banks hold nearly $250 billion in liquidity and eligible assets, and under the package will ​get greater ‌access to reserve balances of up to 30% and term liquidity facilities ‌in both dirhams and US dollars.

In Abu Dhabi, the index added 0.2%, with Abu Dhabi Commercial Bank jumping 3.6%.

The rebound highlights the UAE’s financial resilience and long-term appeal ‌to investors, ‌said Samer Hasn, senior market analyst at XS.com. He said recent weakness may offer attractive entry points, ‌supported by the country’s regulatory framework, political stability, and business-friendly environment.

The Qatari benchmark dropped 1%, with the telecoms firm Ooredoo losing 3.6%.

Oman’s index gained 1.3% and Bahrain’s edged 0.1% higher.

Elsewhere, Boursa Kuwait lost 0.5%. Saudi ​Arabia’s stock market was closed for the Eid holidays. Outside the Gulf, Egypt’s blue-chip index climbed 3.4%, with Commercial International Bank surging 8.5%.

Building on its proactive approach, the Board, under the direction of the Chairman, approved a comprehensive Financial Institution Resilience Package, designed to reinforce the stability and resilience of the UAE banking sector in light of exceptional global and regional circumstances. The CBUAE, which oversees record-high foreign exchange reserves of more than Dhs1 trillion ($270 billion) and a monetary base cover ratio of 119%, reaffirmed the strong fundamentals of the UAE’s Dhs 5.4 trillion banking sector.

The overall stock of liquidity held by UAE banks at the CBUAE, combined with their net eligible assets for conventional CBUAE operations, reached close to Dhs 920 billion ($250 billion), of which banks’ reserve balances exceed Dhs 400 billion ($109 billion).

The Financial Institution Resilience Package covers five key pillars allowing banks to access monetary liquidity and provides additional flexibility to utilise excess liquidity and capital buffers to support the UAE economy:

Pillar I: Monetary Policy Measures - Enhanced access to reserve balances up to 30% of the cash reserve requirement and availability of term liquidity facilities in both Dhs and USD.

Pillar II: Liquidity and Funding Relief - Temporary relief in liquidity and stable funding ratios to provide banks with greater flexibility to support the UAE economy.

Pillar III: Capital Buffer Relief - Temporary release of the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCB) to support the UAE economy.

Pillar IV: Credit Risk Management - Providing flexibility to banks to postpone classification of individual and corporate loans for customers affected by the extraordinary circumstances.

Pillar V: Additional Support - In view of the extraordinary circumstances, and considering the aforementioned support, the CBUAE affirms that banks should continue to provide the required financing services to support their customers and the national economy.

WAM/ Reuters