UAE banks’ assets rise 1.8% to Dh1.66 trillion

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UAE banks’ assets rise 1.8% to Dh1.66 trillion

ABU DHABI — The UAE banks’ deposits, customer loans and assets rose in February, showing a sign of confidence in the economy.

By Haseeb Haider

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Published: Mon 28 Mar 2011, 11:26 PM

Last updated: Tue 7 Apr 2015, 5:03 AM

“Total banks’ loans and advances, net of provisions and interest in suspense, increased by 0.6 per cent, reaching Dh1.049 trillion, and the total banks’ assets increased by 1.8 per cent, reaching Dh1.66 trillion at the end of February this year,” the Central Bank of the UAE said in an announcement posted on its website on Sunday.

The central bank data showed that the total banks’ deposits rose 2.1 per cent on month-on-month basis at the end of February, 2011 to Dh1.079 billion. In the same period last year, banks’ deposits increased by 2.8 per cent and bank loans and advances increased by 1.7 per cent.

“The data shows the economy is on a growth trajectory, as loans and advances have grown,” an independent economist, seeking anonymity told Khaleej Times. “However, the growth is slow,” he said.

In its Emerging Markets Macro and Strategy Outlook, issued on March 24, the Citibank forecast 3.9 per cent economic growth for UAE in the current year, slightly higher than 3.6 per cent in 2010.

“We expect economic growth this year in Dubai will be almost five per cent, rising to over six per cent in 2012,” the Citibank said.

“In Abu Dhabi, government spending and ongoing mega projects continue to drive economic activity, although the real estate sector will be a drag on growth for the next 2-3 years, in our view, due to contagion and the substitution effect from Dubai,” the Citibank said.

Currency circulation up

“During the first two months of 2011, monetary aggregate M2 increased by 4.1 per cent,” the central bank said.

The Central Bank of the UAE said the currency in circulation and currency at banks, or money supply also known as M0, increased by 2.3 per cent month-on-month from Dh46.9 billion at the end of January 2011 to Dh48 billion at the end of February this year.

The currency in circulation plus monetary deposits, i.e., current accounts and call accounts at banks or Money supply also called M1, also rose 2.4 per cent in the period under review to Dh242.7 billion from Dh236.9 billion in the period a month ago.

As regards money supply M2 which comprises M1 plus quasi-monetary deposits, the sum of resident time and savings deposits in dirhams, commercial prepayments in dirhams and resident deposits in foreign currencies, also increased by 2.9 per cent from Dh795.2 billion as at the end of January 2011 to Dh818.3 billion at the end of February, 2011.

And money supply M3, which comprises M2 plus government, deposits at the banking sector, increased by two per cent from Dh997.5 billion at the end of January 2011 to Dh1,017 billion at the end of February this year.

UAE — a net beneficiary

Commenting on the regional political unrest, the Citibank sees the UAE “a net beneficiary.”

Due to its political stability, the bank said “there is a possibility of a diversion of commercial, investor and tourist activity from less stable parts of the region. The external sector thus is the main driver of the recovery, with gains being posted both in export growth, and a reduction in imports.”

Dubai’s economy, in particular, it said “is showing signs of strong recovery as sectors such as tourism, trade, logistics and transportation respond strongly to the rebound in the global economy and may get a boost from the political instability in regional competitors,” the economic outlook said.

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