The Central Bank of the UAE (CBUAE) announced that the total gross assets of banks, including bankers’ acceptances, increased by 0.5 percent from AED4,287.0 billion at the end of May 2024 to AED4,310.2 billion (AED4.31 trillion or $1.16 trillion) at the close of June 2024.
In its report on Monetary and Banking Developments for June 2024, the Central Bank noted that gross credit rose by 1.1 percent, moving from AED2,077.7 billion at the end of May 2024 to AED2,100.9 billion by the end of June 2024.
This growth in gross credit was attributed to a 0.8 percent increase in domestic credit and a 2.9 percent rise in foreign credit.
Sector contributions to domestic credit
The bank highlighted that the expansion in domestic credit stemmed from increases of 1.4 percent in credit to public sector entities and 1.0 percent in credit to the private sector, which counterbalanced reductions of 1.1 percent in government sector credit and 0.6 percent in credit to non-banking financial institutions.
Changes in resident deposits
Banks’ deposits also saw a 0.5 percent increase, rising from AED2,678.2 billion at the end of May 2024 to AED2,692.5 billion at the end of June 2024, WAM noted citing the report. This growth was largely driven by an 8.4 percent surge in non-resident deposits, which offset a slight decline of 0.1 percent in resident deposits.
According to the CBUAE, the decrease in resident deposits was influenced by a 3.0 percent drop in government sector deposits and a 0.1 percent decline in deposits from government-related entities. Conversely, private sector deposits experienced a 0.4 percent uptick, while deposits from non-banking financial institutions rose by 6.6 percent by the end of June 2024.
Money supply developments
The Central Bank indicated that the M1 money supply aggregate rose by 0.6 percent, climbing from AED879.2 billion at the end of May 2024 to AED884.1 billion by the end of June 2024. This increase was driven by a rise of AED7.3 billion in monetary deposits, which outweighed a AED2.4 billion decrease in currency circulation outside banks.
The M2 money supply aggregate increased by 0.4 percent, rising from AED2,160.3 billion at the end of May 2024 to AED2,169.4 billion by the end of June 2024. The rise in M2 was propelled by the higher M1 and an increase of AED4.2 billion in quasi-monetary deposits.
M3 also saw a modest rise of 0.1 percent, increasing from AED2,629.7 billion at the end of May 2024 to AED2,632.0 billion at the end of June 2024, driven by M2 growth despite a AED6.8 billion decline in government deposits.
Changes in monetary base
Moreover, the monetary base contracted by 0.3 percent, decreasing from AED727.1 billion at the end of May 2024 to AED725.0 billion at the end of June 2024. This decline was primarily due to a 2.3 percent reduction in currency issued and a 42.2 percent drop in banks and Other Financial Corporations’ (OFCs) current accounts and overnight deposits at the CBUAE, alongside a 0.5 percent decrease in monetary bills and Islamic certificates of deposit. Nevertheless, the reserve account rose by 37.3 percent.
Milestone in foreign assets
For the first time in its history, the total foreign assets of the Central Bank of the UAE surpassed AED770 billion by the end of June, climbing by 0.5 percent from AED766.73 billion in May to AED770.6 billion in June 2024, an increase of AED3.88 billion.
Additionally, on a year-on-year basis, the central bank’s foreign assets surged by 30 percent to AED592.11 billion in June 2023, marking an increase of approximately AED178.5 billion.
Breakdown of foreign assets
The statistics provided by the Central Bank attributed this growth to a rise in bank balances and deposits with foreign banks, reaching AED533.86 billion, while foreign securities increased to AED179.72 billion, and other foreign assets exceeded AED57 billion by the end of June.
Noteworthy that the Central Bank’s foreign assets do not encompass its Reserve Tranche Position (RTP) or Special Drawing Rights (SDR) holdings with the International Monetary Fund (IMF).
Balance sheet
The balance sheet of the Central Bank of the UAE reached AED806.39 billion at the end of June, reflecting a year-on-year increase of 24.2 percent compared to AED649.4 billion in June 2023, which translates to an increase of AED157 billion.
Read more: National banks in the UAE invest $1.19 billion in local stock markets in 12 months: CBUAE
Asset allocation
Furthermore, the breakdown of the central bank’s balance sheet shows AED352.79 billion allocated for cash and bank balances, AED206.43 billion for investments, AED208.78 billion for deposits, AED1.71 billion for loans and advances, and AED36.68 billion for other assets.
Liabilities and capital distribution
In addition, on the liabilities and capital side, the balance sheet allocated AED396.72 billion for current and deposit accounts, AED226.93 billion for monetary bills and Islamic certificates of deposit, AED145.36 billion for cash and coin circulation, AED26.56 billion for capital and reserves, and AED10.82 billion for other liabilities.
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