UAE banks provide Dhs745.5bn credit to business, industrial sectors

The Central Bank of the UAE (CBUAE) said national banks increased their credit financing to business and industrial sectors by 4 per cent or Dhs28.6bn in the first five months of 2023 to Dhs745.5bn, according to state news agency WAM.

The latest data from the central bank reflects that UAE’s national banks increased their credit balance to the sectors by Dhs8.2bn in May, a 3.3 per cent year-on-year growth or Dhs23.9bn compared to Dhs721.6bn a year ago.

National banks gave 90.3 per cent of their combined credit balance totalling Dhs825.6bn to the two sectors by the end of May, while foreign banks accounted for 9.7 per cent or Dhs80.1bn.

CBUAE said Abu Dhabi-based banks provided Dhs370.1bn in credit to these sectors by the end of May, banks in Dubai provided Dhs353.7bn while those in other emirates availed Dhs101.8bn during the period under review.

The central bank said the business and industrial sectors received credit financing mostly from traditional banks, which provided Dhs679.8bn or 82.3 per cent of the total funding, while Islamic banks contributed Dhs145.8bn or 17.5 per cent.

UAE banks’ gross assets

Meanwhile, CBUAE said the gross assets of banks operating in the country rose by one per cent to Dhs3.80tn at the end of April compared to Dhs3.76tn a month earlier.

The central bank said UAE banks’ gross credit increased by 0.1 per cent to Dhs1.89tn in April, driven by a 0.4 per cent growth in domestic credit, overriding a 2.3 per cent plunge in foreign credit.

Domestic credit rose due to increases in credit to the public sector (government-related entities) and the private sector, respectively.

CBUAE said total bank deposits rose by 1.9 per cent to Dhs2.30tn in March to Dhs2.35tn in April, driven by a 2.1 per cent increase in resident deposits and 0.9 per cent growth in non-resident deposits.

The apex lender attributed the increase in resident deposits to 2.7 per cent, 9.3 per cent and 1.4 per cent growth in the government sector, public sector and private sector deposits, respectively. Meanwhile, non-banking financial institutions’ deposits plunged by 16.4 per cent during the same period under review.

The UAE central bank also said that the money supply aggregate M1 reached Dhs775.2bn in April, a 2.1 per cent increase from Dhs759.3bn a month earlier.

This was due to Dhs3.3bn and Dhs12.6bn increase in currency in circulation outside banks and monetary deposits, respectively.

The money supply aggregate M2 jumped by 2 per cent to Dhs1.82tn in April from Dhs1.78tn in March. The central bank attributed the increase in M2 to an elevated M1, and an Dhs19.4bn rise in quasi-monetary deposits.

CBUAE said the money supply aggregate M3 also soared by 2.2 per cent to Dhs2.25tn in April, owing to the increase in M2 and a Dhs13.9bn rise in government deposits.

The monetary base in the country’s banking system reached Dhs601bn in April, a 5.6 per cent increase from Dhs569bn in March.

The main drivers of this expansion of the monetary base were increases in currency issued, reserve accounts and monetary bills and Islamic certificates of deposit.

Read: Gross assets of UAE banks hit Dhs3.8tn in April