The UAE banking sector has emerged from recent years not just stable—but stronger than ever. According to the Central Bank’s latest Q1 2025 Core Financial Soundness Indicators (FSIs), UAE banks are sitting on healthy capital, growing profits, and a sharp improvement in asset quality.
For SMEs in the UAE—the real engine of economic growth—this creates a unique window of opportunity.
Capital Is Not the Constraint
With total regulatory capital now at AED 579.7 billion and a capital adequacy ratio of 17.6%, UAE banks have more than enough financial muscle to lend. Tier 1 capital and CET1 ratios also remain strong.
So if funding isn’t flowing fast enough to the SME sector, it’s not because banks can’t lend—it’s because the lending models need to evolve.
Risk is Dropping
Non-performing loans (NPLs) are down to just 3.8% of gross loans, the lowest in recent memory. Provisioning has improved, and credit risk is much better managed.
This matters because SME lending is typically viewed as higher risk. But when a system-wide drop in credit losses occurs, that’s the moment to open the lending tap for the entrepreneurial economy.
Liquidity Is Ready and Waiting
Banks in the UAE are holding AED 857.9 billion in liquid assets. Liquidity coverage and stable funding ratios are strong, giving lenders the flexibility to respond to working capital and cash flow needs quickly.
Whether it’s for inventory finance, invoice discounting, or seasonal expansion, SMEs need agile lending—and the system can handle it.
Profitability = Room to Innovate
Banks earned AED 81.5 billion in net profit after tax, and returns on equity remain robust at 14.7%. This profitability gives banks the room to:
- Take calculated risks on emerging sectors
- Collaborate with fintech lenders
- Offer sector-specific SME lending products
- Fund early-stage businesses with viable cash flow models
What Should SMEs Do Now?
At Synergy Fin. Consulting, we see this as a moment of alignment. The financial system is healthy. The policy intent is clear. What SMEs need is better access, stronger documentation, and the right advisory support to become fundable.
If you’re an SME looking to raise funds through banks, fintechs, or institutional investors—reach out to us.
When banks are healthy and SMEs are ready, economies grow. Let’s use this moment to build something better—for your business, and for the UAE.
Contact us: cs@consultsynergy.ae
