Non-resident deposits at banks grow 19.6% in Q3

Abu Dhabi - Non-resident deposits increased by 19.6 per cent year-on-year, to Dh158.5 billion, at the end of the third quarter of 2014.

The non-resident deposits at the banks in the country rose 19.6 per cent year-on-year in the third quarter of the year ended September 30, to benefit from the tax-free interest rates.
Non-resident deposits increased by 19.6 per cent year-on-year, to Dh158.5 billion, at the end of the third quarter of 2014.
"Non-resident deposits have been on an increasing trend," said Alp Eke senior economist at National Bank of Abu Dhabi.
"In my opinion higher number of UAE located, non-residents are choosing to deposit funds here because of tax free interest rates offered by the local banks," the economist said.
Commercial institutions account for the highest share of non-residents deposits, he said.
Customer deposits of resident and non-resident customers also increased by 1.6 per cent, reaching Dh1.44 trillion.
Resident deposits decreased by 0.3 per cent year-on-year reaching Dh1.27 trillion at the end of the third quarter of 2014.
In September 2015, total non-residents deposits grew by 19.66 per cent year-on-year and reached Dh158.5 billion.
Bank assets and loans between the end of the third quarter of 2015 rose 4.8 per cent to Dh2.42 trillion by the end of September 2015. "This hike was mainly brought about by seven per cent increase in credit, reaching Dh1.48 trillion."
Money Supply M1, which comprises currency in circulation outside banks i-e currency issued - cash at banks plus monetary deposits, decreased by 2.3 per cent in the third quarter, compared to a 0.7 per cent dropped during the same period last year.
On an annual basis, the monetary aggregate M1 increased by 5.2 per cent toDh453.6 billion.
Money Supply M2 , which is M1 plus Quasi Monetary Deposits, saving accounts, time deposits, and all deposits in foreign currencies, dropped by 1.1 per cent.
On an annual basis, M2 grew 3.5 per cent to Dh 1.176.4 trillion. Money Supply M3, which is M2 plus government deposits at banks and at the Central Bank dropped one per cent during the third quarter of 2015.
On an annual basis, Money Supply M3 decreased by 0.2 per cent to Dh1.341.9 trillion.
The M3 declined because government deposits are declining, said Alp Eke.
Government deposits even though it increased 5.2 per cent month-on-month, in annual terms it decreased by 20.19 per cent year on year, he said.
The share of government deposits overall has been declining as well, the economist said. "Government deposits used to constitute 20 per cent of overall deposits but currently only 11.5 per cent," he added.
Generally, the median money supply M2 is considered the best indicator for the availability of liquidity in the economy, as it comprises currency in circulation outside banks, in addition to various deposits of the resident private sector in the UAE.
Statistical data show that, during the third quarter of 2015, this indicator contracted in contrast to a relatively more moderate contraction of M2 in the third quarter of last year.
Capital and reserves aggregate capital and reserves of banks operating in the UAE increased from Dh283.8 billion at the end of the third quarter of 2014 to Dh307.5 billion at the end of the same period of 2015.
Capital and reserves increased by 8.4 per cent during 2015. The total capital adequacy ratios remained well above the 12 per cent capital adequacy and eight per cent Tier1 ratios prescribed by the Central Bank regulations.
Capital adequacy ratios measures the amount of a bank's capital expressed as a percentage of its risk weighted credit exposures. A high capital adequacy ratio provides protection to depositors and promotes the stability and efficiency of the financial system of an economy.
- haseeb@khaleejtimes.com