Several of the UAE’s largest banks have raised interest rates on savings accounts and bank deposits as part of a new strategy to attract more deposits.

According to Arabian Business, UAE financial institutions have not been immune to the economic repercussions and costs of the war between the United States and Iran, prompting some banks to revise their strategies and introduce new financial products and services on more attractive terms.

Despite continued economic uncertainty and tensions arising from conflicts across the region, the UAE’s investment environment remains robust.

Deposit interest rates rise to 5.6%

First Abu Dhabi Bank (FAB) has recently launched a new initiative to attract savings deposits.

Under the initiative, the interest rate on new deposits has been raised to 5.6% until the end of December. Compared with the previous rate of 4%, this represents an increase of 1.6 percentage points.

Other UAE banks are also reviewing their banking products and interest rates in an effort to attract more deposits.

Emirates NBD has also announced deposit interest rates of up to 5.5%. However, this rate applies to deposits classified by the bank as high-value deposits.

UAE bank lending rises 18.1%

New figures show that the volume of bank credit and lending in the UAE increased by 18.1% in the second quarter of 2026 compared with the same period a year earlier.

The increase coincided with 14% growth in bank deposits, pushing the UAE banking system’s loan-to-deposit ratio from 77.7% in 2025 to more than 80%.

The higher ratio indicates that bank lending is growing faster than deposit funding, a trend that could intensify competition for new deposits.

Pressure mounts on UAE banks’ funding

Funding conditions in the UAE banking system are also changing.

According to the report, banks’ access to funding has become more limited, while the UAE’s monetary base has declined by around 13.5% since the war between the United States and Iran began in February.

In addition, the withdrawal of support from the Central Bank of the UAE and the transfer of some regional capital to India’s special US dollar deposit scheme for non-residents have placed further pressure on banks’ funding resources.

Against this backdrop, major UAE banks are seeking to attract more funding and maintain their position in the banking market by raising deposit interest rates and offering more competitive terms.

These developments indicate that despite continued economic activity and the UAE’s relatively robust investment environment, competition among banks for liquidity and customer deposits is intensifying.