The Central Bank of the UAE (CBUAE) announced that the UAE banking system's foreign reserves increased by Dh12.6 billion in three months, from November 2020 to January 2021, to Dh519 billion.

The accumulated balance of the country's foreign reserves increased by 2.3 percent to Dh507 billion, up from Dh507 billion in November last year.

The national banking system's international reserves have been steadily increasing, demonstrating its strong financial solvency and its ability to meet the country's needs from global markets.

The foreign reserves of the UAE banking system have a forecast to expand further in the coming months, reflecting recent changes in system's indexes.

The governor of the CBUAE, Abdulhamid M. Saeed Alahmadi, recently reported that the nation's banking system's overall liquidity has returned to pre-Covid levels.The base forecast shows the UAE economy recovering in 2021, with real GDP by 2.5 percent.

According to state news agency WAM, Alahmadi said during a meeting with CEOs of the country's largest banks, "CBUAE will continue tracking the business and economic developments both in the UAE and globally."

The CBUAE's Dh100 billion economic stimulus package, the Targeted Economic Support Scheme (TESS), was launched a year ago on March 15 to help companies deal with the economic fallout of the Covid-19 pandemic and improve liquidity in banking system. This included Dh50 billion in no-interest, collateralized loans for UAE-based banks, as well as Dh50 billion in funds released from banks' capital buffers.

According to the CBUAE, banks drew down Dh22 billion from the dedicated TESS zero-cost liquidity facility in March 2021, down from a peak of Dh44 billion in Q2 2020.

The TESS programme, which was initially implemented for six-month, was later extended. The CBUAE extended the validity of main TESS scheme elements, such as the zero-cost liquidity facility and the TESS loan deferral and recovery programme, until June 30, 2021, and other regulatory relief initiatives, which keep implementing until 2021.

More than 320,000 consumers have benefited from the TESS programme since its inception, including individuals, small and medium-sized companies, and other private corporations. There are about 175,000 consumers that are covered by it.

"It's encouraging to see that the TESS programme has had a positive effect on the UAE banking sector and economy." “The stimulus package was introduced at a crucial juncture, ensuring that banks were able to offset funding and liquidity pressures while maintaining lending capability,” Alahmadi said.

The apex bank announced in February that the UAE national banks had issued close to Dh14.47 billion in stimulus through the TESS scheme.

Meanwhile amidst the coronavirus pandemic, banks across the UAE have decreased their payrolls and closed more branches, because of its shift towards digitization and cost-cutting.

18 branches were closed between October and December 2020, bringing the total number of outlets nationwide to 541 at the end of the previous quarter. During the same time span, 447 banking workers lost their jobs, taking the total workforce to 33,444 at the end of December 2020, down 1.3 percent.

The UAE Central Bank said in its latest Quarterly Economic Review that “the need for operational efficiency and cost effectiveness to help banks' bottom line is driving digitization and the closure of branches.”