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Resilient UAE banks maintain stability despite geopolitical challenges
Economy posts solid growth as banks, insurers continue uninterrupted operations despite widening geopolitical conflict
- PUBLISHED: Fri 27 Mar 2026, 7:30 AM
The UAE’s financial sector continues to demonstrate remarkable resilience despite heightened military tensions in the region involving the US, Israel, and Iran. Analysts credit the UAE’s solid macroeconomic fundamentals and robust economic momentum for sustaining financial sector stability.
Senior officials and industry analysts report that banks, financial institutions, and insurers are operating normally, maintaining uninterrupted nationwide services. Foreign banks based in the UAE also remain confident in the country’s long term prospects, with no plans to scale back their operations despite regional uncertainty.
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Experts estimate that the UAE economy expanded by around 4.9 per cent in 2025, driven by strong non oil performance in trade, tourism, construction, and financial services. Strong government spending, rising private sector investment and expanding business activity supported credit growth across corporate and retail segments.
Khaled Mohamed Balama, Governor, Central Bank of the UAE, reaffirmed this outlook, emphasising that the sector continues to exhibit “the highest levels of resilience and stability” amid ongoing geopolitical developments. He noted that banks, financial institutions, and insurance companies across the country are operating normally and continue to deliver their services to customers and the public efficiently and without disruption nationwide.
“I also reaffirm that the UAE’s banking systems, payment systems, and national financial infrastructure continue to operate with full efficiency and stability. These systems are supported by advanced operational and technological frameworks that ensure the seamless, secure, and uninterrupted functioning of banking and financial services,” said Balama.
The Central Bank of the UAE said it maintained close coordination with relevant authorities and financial institutions to monitor developments, ensuring full operational readiness and the uninterrupted provision of banking and financial services across the country.
“We also conduct regular assessments and stress-testing exercises to ensure the continued soundness and resilience of the financial system,” Balama said.
The Governor also assured that the bank maintains full operational readiness to provide the necessary support to safeguard the achievements realised over more than five decades of progress and prosperity.
Upbeat Outlook
Analysts expect the outlook for 2026 to remain broadly upbeat, even as anticipated global interest rate cuts could slightly narrow net interest margins. Ratings agencies, including S&P Global Ratings and Fitch Ratings, forecast that UAE banks will maintain strong profitability and sound asset quality, supported by resilient economic growth, healthy capital buffers and abundant liquidity.
S&P projects that lenders will continue to benefit from favourable operating conditions and stable funding, though earnings growth may ease as rates decline. Fitch offers a similar view, noting that the sector is set to stay resilient next year, buoyed by solid capitalisation, improving asset quality and continued government backing.
Both agencies say high levels of capital and liquidity will allow banks to absorb any margin pressures comfortably. Diversified income sources such as fees, commissions and investment returns, are expected to help sustain profitability, while increased exposure to government-related entities and major corporate projects is likely to support credit expansion.
Moody’s Ratings also expects banks to remain on solid footing, even as the property market cools after five years of rapid expansion.
“Banks in the UAE are set to remain resilient even as the property market gradually cools over the next 12 to 18 months, following half a decade of strong growth. Regulatory caps on real estate exposure, strong capital buffers, and solid liquidity are likely to protect lenders’ asset quality in the event of a downturn,” the agency noted.
Financial and banking institutions operating in the UAE implement advanced frameworks for risk identification, risk management, and business continuity in line with leading international standards and best practices. This further strengthens their capacity to address potential developments and emerging challenges with agility and resilience.
Proved Resilience
Banking experts said the UAE’s financial sector has proven its ability to withstand geopolitical pressures, supported by strong economic performance and unwavering confidence from both local and foreign institutions.
“With robust macroeconomic growth, uninterrupted financial operations, and assurances from the Central Bank’s leadership, the sector continues to project stability and resilience during a period of regional uncertainty.”
Even leading foreign banks operating in the UAE and the Middle East region have reposed strong confidence in the resilience and sophistication of economies across the region. Some of the leading global lenders such as Citibank dispelled the impression that it is existing from the Middle East market due to military conflicts in the region.
Responding to ‘false information’ about its operations across the Middle East region, the US lender denied reports of damage to any of its branches and said all UAE and Bahrain-based employees are “safe and accounted for”.
“With robust contingency and resilience plans, the bank is ensuring business continuity while continuing measures to keep employees and their families safe, the Citibank said.
“Closures of some branches in UAE are temporary, and the bank chose to evacuate three of its buildings to prioritise safety,” Citibank said and clarified that it continues to serve clients in UAE and Bahrain ‘without interruption.
The Citibank has maintained a continuous presence in the region for over six decades, and has “strong confidence in the resilience and sophistication of regional economies.”
Earlier, the US newswire agency Reuters reported that the Iranian military said it was planning to hit economic targets, banks in the region, after strikes on the Iranian bank. Tehran has been targeting the Gulf countries with drones and missiles in response to the US-Israel attacks on its civil and military installations and infrastructures.
UAE — A Key Market
The UK-headquartered Standard Chartered Bank said it continues to monitor developments closely. “The UAE and our other Middle East markets remain an important part of our global network, through which we continue to support clients navigating a complex and fast-moving environment.”
The British lender further said it has extended its Middle East work-from-home policy to its Dubai offices as well due to the ongoing military conflict in the region.
“Our focus is the safety and well-being of our colleagues. With this in mind, we are maintaining normal service under work-from-home arrangements in the Middle East. Contrary to some media reporting, these arrangements were recently extended in Dubai,” the bank said in a statement.
HSBC Chief Executive Officer Georges Elhed also reaffirmed that the bank’s confidence in Gulf region unchanged amid US-Israeli conflict with Iran. In some of the first comments from an international bank top executive on the growing crisis, the HSBC chief highlighted the region as key to his group’s strategy of capitalising on inter-regional global deal and capital flows to boost the bank’s overall profitability.
“HSBC remains steadfast in our confidence in the GCC and in the long-term strength, resilience and promise of the region. We continue to believe that the years ahead will bring renewed stability, growth, and prosperity,” Elhedery said in a statement.
On February 25, three days before the Middle East’s conflict began, Elhedery told investors conference call that the ‘Asia-Middle East corridor’ is becoming a defining axis of global growth.
“The UAE was among the markets key to the bank’s strategy to grow wealth management fees,” he said.
HSBC does not disclose the Middle East contribution to its profit, but a Reuters calculation from company figures showed that its UAE’s and Saudi Arabian businesses, which account for the vast majority of its activity in the region, have together contributed five per cent of overall group profits annually over the past five years.
Looking ahead, analysts say the UAE’s strong fundamentals, bolstered by prudent regulatory oversight, diversified non oil growth, and consistent institutional confidence, position the country well to navigate any further volatility.
