UAE Banking Sector Sees Growth With Total Assets Reaching AED 4,378 Billion By August 2024

The UAE Central Bank has made public its latest financial assessments, revealing an uptick in the banking sector's assets for August 2024. According to the report, the total assets of banks, inclusive of bankers' acceptances, observed a 0.7% increase, reaching AED4,378.0 billion by the end of August from AED4,348.6 billion at the close of July.

This period also saw a rise in gross credit by 0.5%, marking a climb from AED2,102.1 billion to AED2,112.9 billion over July to August. The surge in gross credit can be attributed to a 0.5% rise in domestic credit alongside a 0.8% increase in foreign credit, indicating a robust lending landscape within the country.

A noteworthy aspect of the domestic credit increase was the 0.8% boost in lending to the private sector. This growth overshadowed a 0.3% decline in credit to the public sector entities and a more significant 3.0% reduction in loans to non-banking financial institutions. Meanwhile, lending to the government sector remained unchanged throughout August 2024.

In the realm of deposits, the banking system experienced a modest 0.2% growth, with total deposits elevating from AED2,736.0 billion at the end of July to AED2,740.5 billion by August's end. The primary force behind this augmentation was a 0.8% increase in resident deposits, despite a 6.4% drop in deposits from non-residents.

Resident deposit growth was driven by upticks across various sectors: government sector deposits rose by 2.6%, private sector by 1.2%, and deposits from non-banking financial institutions by 4.2%. However, these gains were partially offset by a 5.9% fall in deposits from government-related entities.

Shifting focus to the broader monetary aggregates, the UAE Central Bank reported a slight 0.1% decline in the money supply aggregate M1, which fell from AED889.3 billion in July to AED888.0 billion in August 2024. This decrease was primarily due to a reduction in currency in circulation and a drop in monetary deposits.

Conversely, the money supply aggregate M2 experienced a 0.2% increase, reaching AED2,211.1 billion up from AED2,205.9 billion, thanks to a notable growth in Quasi-Monetary Deposits. Moreover, the M3 aggregate saw a significant 0.8% increase, propelled by the expansion in M2 and a substantial AED15.1 billion rise in government deposits.

The report also highlighted a 2.3% expansion in the monetary base, which rose from AED718.1 billion at the end of July to AED734.9 billion by the end of August 2024. This growth was fueled by increases in the currency issued, reserve accounts, and monetary bills & Islamic certificates of deposit, despite a 10.2% reduction in banks & OFCs' current accounts & overnight deposits at the CBUAE.