CBUAE Announces Monetary And Banking Growth In December 2023

The Central Bank of the UAE (CBUAE) has recently disclosed significant movements in the country's monetary aggregates for December 2023, showcasing notable shifts in various financial indicators. Among these, the Money Supply aggregate M1 witnessed a 4.0 percent increase, reaching AED829.3 billion by the end of December 2023, up from AED797.4 billion at the end of November 2023. This rise is attributed to a combination of a AED1.9 billion uptick in Currency in Circulation Outside Banks and a substantial AED30 billion growth in Monetary Deposits.

Furthermore, the Money Supply aggregate M2 also experienced a robust growth, escalating by 4.5 percent to AED2,023.4 billion at the close of December 2023 from AED1,935.4 billion at the end of November 2023. This increase was propelled by the augmented M1 and a significant AED56.1 billion rise in Quasi-Monetary Deposits.

In addition, the Money Supply aggregate M3 saw a 2.4 percent increase, moving up to AED2,445.2 billion in December 2023 from AED2,388.6 billion in November 2023. The growth in M3 was primarily due to an increase in M2, despite a AED31.4 billion reduction in Government Deposits.

The Monetary Base expanded significantly by 7.3 percent, from AED614.0 billion at the end of November 2023 to AED658.8 billion at the end of December 2023. The primary drivers behind this surge included a 1.5 percent rise in Currency Issued, a 6.4 percent increase in Reserve Account, a notable 32.9 percent jump in Banks and OFCs’ Current Accounts and Overnight Deposits at CBUAE, and a slight 0.2 percent uplift in Monetary Bills and Islamic Certificates of Deposit.

On the banking sector front, gross banks’ assets, inclusive of bankers’ acceptances, rose by 1.2 percent to reach AED4,075.2 billion by December's end from AED4,026.0 billion at November's close. However, Gross Credit slightly declined by 0.1 percent from AED1,994.5 billion at the end of November to AED1,991.7 billion at the end of December 2023.

This decrease in Gross Credit was primarily due to a reduction in Domestic Credit by 0.8 percent, overshadowing a 4.6 percent increase in Foreign Credit. The Domestic Credit reduction was marked by decreases across various sectors: Government Sector credit contracted by 0.9 percent, Public Sector (Government Related Entities) credit by 1.3 percent, and Private Sector credit also by 1.3 percent.

Conversely, credit to Non-Banking Financial Institutions saw an extraordinary surge of 66.1 percent during December 2023.

Total Bank Deposits experienced a healthy growth of 3.2 percent, escalating from AED2,444.3 billion at November's end to AED2,521.9 billion by the close of December 2023. This increase was fueled by growths in both Resident Deposits by 2.7 percent and Non-Resident Deposits by an impressive 8.9 percent.

Within Resident Deposits, there was an observable expansion across several sectors: Public Sector (Government Related Entities) Deposits grew by 2.2 percent, Private Sector Deposits by 4.2 percent, and Non-Banking Financial Institutions Deposits surged by an astonishing 44.9 percent.

However, it's noteworthy that Government Sector deposits experienced a decline of 6.8 percent during this period.

The data provided by CBUAE for December 2023 underscores significant movements within the UAE's financial landscape, reflecting both growths and contractions across different monetary aggregates and banking sector indicators.

With inputs from WAM