The Central Bank of the UAE (CBUAE) has unveiled a robust performance in the country’s banking sector, with total assets, including bankers’ acceptances, growing by 1.3% to AED4.456 trillion ($1.21 trillion) by the end of October 2024, up from AED4.4 trillion in September.
Credit Growth Shows Positive Momentum
Gross credit increased by 0.6%, reaching AED2.175 trillion in October 2024 compared to AED2.161 trillion in September. This rise was fueled by:
- Domestic credit: +0.6%
- Foreign credit: +0.7%
Within domestic credit, the following trends emerged:
- Government sector credit grew by 0.2%.
- Public sector (government-related entities) credit surged by 3.0%.
- Private sector credit edged up by 0.1%.
A 1.8% decline in credit to non-banking financial institutions partially offset these gains.
Deposits Hit New Highs
The banking sector also recorded a 1.5% increase in total deposits, rising from AED2.761 trillion in September to AED2.803 trillion in October 2024. Key contributors included:
- Resident deposits: +1.2%
- Non-resident deposits: +4.7%
Government sector deposits climbed by 2.3%, while government-related entities and private sector deposits increased by 3.6% and 1.1%, respectively. However, deposits from non-banking financial institutions dropped by 13.0%.
Money Supply Expands Across All Aggregates
Significant growth was observed in all money supply measures:
- M1: Increased by 1.5%, reaching AED909.9 billion, driven by a AED14.9 billion rise in monetary deposits.
- M2: Up by 0.9% to AED2.271 trillion, bolstered by a AED7.5 billion rise in quasi-monetary deposits.
- M3: Grew by 1.3%, reaching AED2.755 trillion due to growth in M2 and a AED13.8 billion rise in government deposits.
Slight Decline in Monetary Base
The monetary base contracted marginally by 0.1%, dipping from AED743.5 billion in September to AED743.0 billion in October. This was attributed to an 11.4% reduction in banks’ and other financial corporations’ current accounts and overnight deposits with the CBUAE.
Other components of the monetary base recorded increases:
- Currency issued rose by 0.8%.
- Reserve account improved by 0.05%.
- Monetary bills and Islamic certificates of deposit grew by 6.2%.
Outlook
The CBUAE’s October 2024 Monetary & Banking Developments report reflects a thriving banking sector supported by rising assets, deposits, and credit. This growth highlights the resilience and stability of the UAE’s financial landscape, paving the way for sustained economic momentum in the years ahead.
