UAE Bank Credit Growth 2026: Lending Outpaces Gulf Peers Three-to-One

UAE bank credit growth is running at nearly three times the pace of its Gulf neighbors, and lenders are not showing any sign of slowing down. Gross credit across the country’s banks reached AED2.76 trillion ($752 billion) by the end of June 2026, up 18 percent from a year earlier, according to central bank data cited by Arabian Gulf Business Insight.

The comparison with the rest of the region is stark. Annual credit growth in July came in at 6.8 percent in Saudi Arabia, 6.8 percent in Kuwait and 5.3 percent in Qatar, according to figures from their respective central banks. The UAE, by contrast, has kept expanding even as the wider region absorbed the economic shock of the Iran war.

Why UAE bank credit growth is pulling ahead

Jon Peace, head of Mena equity research at UBS, called the UAE’s credit expansion “super strong and resilient and clearly ahead of other Gulf countries.” He noted that rival markets are growing credit at roughly a third of the UAE’s rate, and that the gap is not closing. UBS has made UAE banks its preferred pick in the region on the back of that momentum.

A large part of the story is happening outside the UAE’s own borders. Foreign credit extended by UAE banks climbed 12 percent so far this year and 38 percent year on year, reaching AED582 billion in June. First Abu Dhabi Bank, the country’s largest lender, now operates in 20 markets and earns more than a fifth of its revenue abroad. Emirates NBD, Dubai’s top bank, generates over a quarter of its income through its Turkish subsidiary, and its June purchase of a majority stake in India’s RBL Bank added further heft to its overseas loan book.

Government borrowing is doing heavy lifting too

Public sector spending is another major driver. Borrowing by government entities totalled AED251 billion in June, while government-related entities borrowed AED351 billion, both up 28 percent year on year. Naresh Bilandani, a managing director at Jefferies International in Dubai, said UAE banks “benefit from a solid lending backdrop, led by an ambitious public-sector capex outlook across energy, chemicals, logistics, defense, utilities and AI/tech.”

UBS’s Peace pointed to the same dynamic from a different angle, saying government and government-related borrowing has accelerated in response to the Iran conflict and is “an important driver of the optimism that UAE banks have for this year and next.”

Forecasts keep getting revised upward

Major UAE banks now forecast loan growth of 15 to 20 percent for all of 2026. Jefferies has followed suit, lifting its expectation for sector credit growth to 15 percent annually between 2025 and 2028, up from an earlier estimate of 13 percent.

Private borrowing tells a more mixed story. Corporate lending rose a modest 3 percent this year to AED951 billion in June, and was actually down slightly from May, suggesting cash-rich companies still have limited appetite to borrow. Real estate and construction loans expanded by AED15.6 billion despite a sharp sell-off in property developer bonds this year, and Peace noted that Dubai developers have “slowed their project releases somewhat,” while Abu Dhabi’s market remains stronger.

Consumer lending has held up better than expected. Credit to individuals reached AED598 billion, up 14 percent annually, even as analysts had braced for the Iran war to trigger a rise in loan defaults similar to what happened during the Covid-19 pandemic. Instead, asset quality has actually improved: Emirates NBD’s non-performing loan ratio fell 0.2 percentage points to 2.1 percent this year, while FAB’s ratio held steady at 2.2 percent.

What could slow the pace

The main risk flagged by analysts is a widening gap between credit and deposit growth. Gross credit rose 7 percent in the first half of 2026, compared with just a 4 percent rise in non-government deposits, and that divergence is pushing loan-to-deposit ratios higher across the sector. Bilandani cautioned that the excess liquidity and limited domestic credit demand that fuelled international lending in recent years “may gradually reverse in the coming quarters.”

For now, though, the numbers still favor the bulls. “Investors have been pleasantly surprised by just how resilient consumer borrowing is,” Peace said, adding that it points to healthy consumer confidence and population growth on the ground, both of which continue to feed the credit cycle that has made UAE banks the standout performers in Gulf finance this year.

Sources: AGBI.

Read more: UAE Central Bank Operational Risk Regulation: What C 1/2026 Means for Banks.