UAE Banking Sector Assets Hit AED 4.1 Trillion In January 2024, Reveals CBUAE

The Central Bank of the UAE (CBUAE) has recently disclosed financial statistics indicating a modest growth in the banking sector at the start of 2024. According to the latest data, the gross assets of banks, inclusive of bankers' acceptances, saw an increase of 0.8 percent, reaching AED 4,109.1 billion by the end of January 2024 from AED 4,075.2 billion at the close of December 2023.

Furthermore, the report highlighted a slight uptick in gross credit by 0.2 percent from AED 1,991.7 billion at December's end in 2023 to AED 1,996.2 billion by January 2024. This growth in gross credit is attributed mainly to a 1.9 percent rise in foreign credit, which compensated for a marginal decline in domestic credit by 0.01 percent. Notably, the domestic credit reduction was due to contractions in various sectors: government sector credit decreased by 0.1 percent, public sector (government-related entities) by 1.3 percent, and non-banking financial institutions by a significant 13.6 percent. Conversely, credit extended to the private sector experienced a growth of 0.5 percent during this period.

On the deposits front, total bank deposits experienced a growth of 0.7 percent, escalating from AED 2,521.9 billion at December's end in 2023 to AED 2,539.9 billion by January's end in 2024. This increase was primarily due to a rise in resident deposits by 0.9 percent, despite a decrease in non-resident deposits by 1.8 percent. The expansion in resident deposits was supported by increments across various sectors: government sector deposits rose by 4.7 percent, public sector deposits by 1.0 percent, and private sector deposits also by 1.0 percent; however, deposits from non-banking financial institutions saw a sharp decline of 24.9 percent.

The monetary base expanded by 1.8 percent from AED 658.8 billion at the end of December 2023 to AED 670.9 billion at the end of January 2024. This expansion was largely driven by a significant increase in monetary bills & Islamic certificates of deposit by 12.8%, which outweighed reductions in other areas such as currency issued (down by 0.4 percent), reserve account (down by 1.4%), and banks & OFCs’ current accounts & overnight deposits at CBUAE (down by 9.5 percent).

Additionally, there were slight adjustments observed in the money supply aggregates during this period. The money supply aggregate M1 increased marginally by 0.1 percent from AED 829.3 billion to AED 830.0 billion due to an increase in currency circulation outside banks which overshadowed a fall in monetary deposits. The M2 aggregate saw a rise of 0.2 percent from AED 2,023.4 billion to AED 2,028.3 billion attributed to an increase in M1 and quasi-monetary deposits rising by AED 4.2 billion.

The most significant growth was observed in the money supply aggregate M3 which increased by 1.3 percent from AED 2,445.2 billion to AED 2,478.0 billion at the end of January 2024, bolstered mainly due to an increase in M2 and a substantial rise in government deposits amounting to AED 27.9 billion.

This detailed report from CBUAE provides valuable insights into the UAE's banking sector's performance as it steps into the year 2024, reflecting cautious yet positive growth across various financial indicators.

With inputs from WAM