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UAE banks’ assets surge 7.6% to Dh3.25 trillion

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on November 22, 2020
Wam File photo

Total deposits of resident and non-resident customers with the banks operating in the UAE rose by 2.2 per cent quarter-on-quarter basis.

Total assets of banks operating in the UAE increased by 7.6 per cent year-on-year at the end of September 2020, and two per cent quarter-on-quarter to Dh3.253 trillion, the Central Bank of the UAE (CBUAE) said.

The CBUAE report said combined gross credit of the banks rose by 4.9 per cent year-on-year and 0.8 per cent q-o-q, reaching Dh1.805 trillion at the end of September 2020. The report, which has examined the monetary and banking activities as well as developments in the UAE financial markets during the third quarter of 2020, also reviewed ratios of annual change over the period from September 2019 to September 2020.

The apex bank said total deposits of resident and non-resident customers with the banks operating in the UAE rose by 2.2 per cent quarter-on-quarter basis, reaching Dh1.907 trillion at the end of the third quarter of 2020.

Resident deposits increased by 6.4 per cent to Dh1.716 trillion and non-resident deposits increased by 0.8 per cent year on year at the end of the third quarter of 2020.

Quarter on quarter, non-resident deposits fell by 4.5 per cent, reaching Dh191.3 billion by the end of September 2020.

Global ratings agency S&P said higher cost of risk and lower margins would reduce profitability of banks in the UAE for 2020-2021, but most of them are expected to remain profitable.

“We believe UAE banks’ reduced profitability will last longer due to the high proportion of non-interest-bearing deposits in their funding structures and lower revenue on the asset side. Margins have tightened by 30-40 basis points (bps) due to lower interest rates. Lower margins and higher,” the ratings agency said in a recent report.

According to a recent report by Kamco, the UAE continues to boast the biggest share of total listed bank assets in the GCC at $682 billion or 31.3 per cent of the total GCC banking assets.

Money Supply M1, which comprises currency in circulation outside banks (currency issued — cash at banks) plus monetary deposits, increased by 1.9 per cent quarter-on-quarter basis during the third quarter of 2020.

On an annual basis, there was an 11 per cent climb on year-on-year basis in the monetary aggregate M1, reaching Dh568 billion at the end of September 2020. Money Supply M2 (M1 plus quasi monetary deposits also increased by 0.7 per cent quarter-on-quarter basis during the third quarter of 2020. On an annual basis, there was a 7.9 per cent year-on-year basis increase in money supply M2, reaching Dh1.469 billion at the end of third quarter of 2020.

Meanwhile, the value of gold reserves held with the CBUAE rose by 121 per cent in September 2020 to Dh8.961 billion when compared to December 2019. Month-over-month, they dropped from Dh8.987 billion in August.

The first quarter saw a significant growth in the value of the precious metal reserves, which surged by 47 per cent to Dh5.951 as compared to the end of 2019. In the second quarter, the reserves further increased to Dh6.58 billion before soaring to Dh8.462 in July.

The statistics previously issued by the UAE’s financial regulator showed that its reserves of gold grew exponentially since 2015, which is the year when it decided to resume its reserves of gold and foreign currencies, most notably the dollar and other major currencies. — issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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