UAE gross bank assets increase 0.8% to Dhs3,321.5bn at end of December 2021

The Central Bank of the UAE (CBUAE) has said that the Money Supply aggregate M1 increased by 2.3%, from Dhs686bn at the end of November 2021 to Dhs701.9bn at the end of December 2021.

Gross banks assets, including bankers’ acceptances, increased by 0.8 per cent, increasing from Dhs3,295.8bn at the end of November 2021 to Dhs3,321.5bn at the end of December 2021, according to state news agency WAM.

Gross credit meanwhile increased by 0.3 per cent, rising from Dhs1,788.3bn at the end of November 2021 to Dhs1,794bn at the end of December 2021. Gross credit rose due to 0.1 per cent and 2.6 per cent increases in domestic credit and foreign credit respectively. The Central Bank added that the growth in domestic credit was mainly due to increases by 0.7 per cent, 1.7 per cent and 7 per cent in credit to the government gector, public Sector (government related entities) and non-banking financial institutions respectively. Credit to the private sector decreased by 0.5 per cent.

Total bank deposits increased by 1.5 per cent, rising from Dhs1,966.8bn at the end of November 2021 to Dhs1,996.5bn at the end of December 2021. The rise in total bank deposits was due to increases in both resident deposits and non-resident deposits by 1.6 per cent and 0.6 per cent respectively. Resident deposits rose due to 8.4 per cent, 2.4 per cent and 5.2 per cent increases in public sector deposits, private sector deposits and non-banking financial institutions deposits, respectively. Government sector deposits on the other hand dropped by 6.6 per cent.

The Money Supply aggregate M2 increased 3 per cent, from Dhs1,517.1bn at the end of November 2021 to Dhs1,563.1bn at the end of December 2021.

The Money Supply aggregate M3 also increased by 1.5 per cent, from Dhs1,830.1bn at the end of November 2021 to Dhs1,856.7bn at the end of December 2021.

The rise in M1 was due to Dhs16.6bn increase in Monetary Deposits, overriding the Dhs0.7bn reduction in currency in circulation outside banks. M2 increased due to an elevated M1 and Dhs30.1bn increase in quasi-monetary deposits. M3 rose due to increased M1 and M2, overshadowing Dhs19.4bn fall in government deposits.

The monetary base expanded by 4.8 per cent increasing from Dhs461.7bn at the end of November 2021 to Dhs483.9bn at the end of December 2021. The CBUAE said that the impetus behind this expansion in the monetary base was an 8.9 per cent and 35.7 per cent increase respectively in the reserve account and banks and OFCs’ current accounts and overnight deposits of banks in the CBUAE.

In July 2020, the CBUAE launched a new deposit facility for UAE-based conventional banks. The overnight deposit facility enables local banks to deposit their surplus liquidity at CBUAE on an overnight basis.

Read: UAE’s Central Bank launches new deposit facility for banks

Last month, the CBUAE raised the base rate applicable to the overnight deposit facility by 25 basis points. It followed a decision by the US Federal Reserve Board to increase the interest on reserve balances by 25 basis points.

The CBUAE in March also has decided to maintain the rate applicable to borrowing short-term liquidity from the CBUAE through all standing credit facilities at 50 basis points above the base rate.