Dubai, UAE —The desert nation’s trade finance business is burning candles at both ends. Propelling the boom are shining skyscrapers, thundering free-trade zones, and a concerted effort to kick the oil habit—leading to an import-export bonanza.
UAE banks are on a growth spurt: standalone First Abu Dhabi Bank (FAB) increased trade loan balances by AED 12.77 billion in the first quarter alone of 2025 to AED 63.26 billion—almost twice its 2020 level of AED 32.19 billion. In the meantime, off-balance-sheet behemoths such as letters of credit and guarantees have ballooned—FAB’s contingencies totaled AED 177.95 billion, ahead of Emirates NBD’s AED 97.14 billion.
What’s driving this explosion? Imagine tens of thousands of businesses scattered across free-trade hubs in the UAE, routing goods between Asia and Africa—or steel, cement, and aluminum streamlining into a construction boom in Dubai and Abu Dhabi. Government trade deals with India, Indonesia, and Turkey, plus Dubai’s plan to double its GDP by 2033, further supercharge the demand for financing.
But with such opportunity comes brutal competition. New foreign players in the form of China, Japan, Latin America, and even Canada are doling out cheeky offers like cheap liquidity and discounted fees to poach market share. While corporates get their goodies, experts also warn that this price war is cutting margins. Nevertheless, FAB’s head of trade product innovation, Anirudha Panse, warns that low-margin strategies are a short-term wager—and emphasizes that profitable growth has to be product-driven.
Digital tools are gaining attention. ADCB reports that its ProTrade platform now facilitates nearly two-thirds of its trade transactions. Meanwhile, FAB is moving clients to its user-friendly FABeAccess interface. A final point: while the UAE has become a global commodities hub, with the Dubai Multi Commodities Centre hosting over 25,000 companies, smaller and mid-tier traders still find it difficult to get financing for transactions. Many banks prefer large, wealthy borrowers. This situation prompts some traders to look for trade finance funds, though they often encounter higher premium rates.
In summary, the UAE’s trade finance market is thriving due to economic diversification, digital transformation, and global competition. However, it also deals with challenges such as margin compression and uneven access. Intrigued? Watch this active corridor; it’s changing trade finance dynamics in the Middle East and beyond.
