UAE banks boost deposit offers amid digital rivals, war risk

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UAE banks boost deposit offers amid digital rivals, war risk

June 10, 2026

DUBAI,— UAE banks are raising interest rates on new savings deposits and offering salary-based incentives as they face competition from digital lenders and economic uncertainty stemming from regional conflict risks in the Gulf, including disruptions related to the Iran war and the closure of the Strait of Hormuz.

Over the past decades, the United Arab Emirates has worked to position itself as a leading international center for finance, commerce, and tourism, while gradually shifting its economy away from heavy reliance on oil.

Domestic banks now face pressure from technology-driven challengers with lower operating costs.

The recent attacks since the outbreak of the Iran war and the closure of the Strait of Hormuz have weakened business activity, prompting the central bank to expand liquidity support measures.

The central bank told Reuters that the new offerings from lenders are normal market activity designed to attract retail deposits and support lending.

Fadi Zoghby, a Dubai-based partner at McKinsey, said the conflict may have increased the value of stable retail deposits for banks, though he cautioned against viewing the situation as a sudden war-driven scramble.

He said the timing was notable, but the trend reflected ongoing competition, with banks focusing on tailored products to strengthen customer relationships rather than a broad-based rush for deposits.

Emirates NBD is offering up to 5% annual interest for customers opening or maintaining a Saver Plus account in dirhams and depositing new funds between April 1 and June 30.

Dubai Islamic Bank is advertising returns of up to 6.6% per year for customers who open dirham or dollar accounts between June 1 and August 31, provided they transfer a monthly salary of at least 10,000 dirhams and maintain a minimum average balance of 50,000 AED dirhams.

National Bank of Fujairah is also offering up to 6.25% on new dirham savings accounts opened before July 31, provided customers regularly deposit their salaries monthly.

First Abu Dhabi Bank FAB, UAE — Photo: Dubaidiplomacy.com

These rates are well above the UAE central bank’s 3.65% benchmark rate, as the dirham is pegged to the U.S. dollar and typically follows U.S. Federal Reserve policy in general terms.

Emirates NBD, Dubai Islamic Bank, and National Bank of Fujairah did not immediately respond to requests for comment or declined to comment overall.

Zoghby said the offers reflect an existing competitive trend driven by digital lenders, as banks respond with targeted strategies to become customers’ primary banking provider.

Emirates NBD, First Abu Dhabi Bank, and Abu Dhabi Commercial Bank all reported higher deposits in the first quarter following a strong start to the year, though investors are watching second-quarter data closely as war-related effects become clearer.

Bank of America analysts said liquidity conditions in UAE banks weakened somewhat between March and early May, although they saw no signs of financial stress.

The chairman of the UAE Banks Federation dismissed concerns about capital outflows or dollar shortages, saying second-quarter performance is expected to improve compared with the first quarter.

Government, government-related entities, and public sector institutions accounted for nearly 70% of deposit inflows in the first quarter.

Government deposits rose 14.7% in April from a year earlier to 446.8 billion dirhams, while government-related entities increased contributions by more than 32% to 339.3 billion dirhams, according to central bank data.

The UAE Central Bank described the increase as business as usual, driven mainly by market forces.

It has responded to economic tensions linked to the conflict by expanding access to reserve balances and providing additional funding options in dirhams and U.S. dollars.

McKinsey’s Zoghby safeguards support confidence and resilience but do not replace the need for banks to maintain sustainable funding structures.

central bank said UAE banks have shown strong resilience in liquidity and capital ratios during recent conditions with surplus liquidity held at central bank totaling 181 billion dirhams ($49.29 billion) as of June 9.

(With files from Reuters)