According to the latest statistics from the Central Bank of the UAE (CBUAE), the banking sector in the country has achieved a significant milestone. The total assets of the sector have surpassed AED4 trillion (roughly $1 trillion) for the first time in history.
Monetary and banking developments
The October 2023 monetary and banking developments report by the Central Bank reveals that the total bank assets, including bank acceptance certificates, experienced a monthly growth of 1.1 percent. At the end of October, the total assets amounted to AED3.996 trillion, compared to AED 3.952 trillion in September 2023.
The report also highlighted that total bank credit reached AED1.982 trillion by the end of October. Additionally, total bank deposits increased by 1.4 percent, rising from AED2.42 trillion in September to AED2.455 trillion at the end of October.
The growth in total bank deposits can be attributed to a 0.9 percent increase in residents’ deposits and a 7.4 percent increase in non-residents’ deposits. The rise in residents’ deposits can be further broken down into a 2.3 percent increase in government sector deposits, a 3.4 percent increase in public sector deposits, and a 0.7 percent increase in private sector deposits.
As of October, the cash base amounted to AED596.9 billion. The report indicates a 14.3 percent decline in reserve calculation, alongside a 1.7 percent increase in exported currency. Furthermore, there was a 26.5 percent increase in banks’ and other financial institutions’ current accounts and one-night deposits at the central bank, as well as a 5 percent increase in cash authorizations and Islamic deposit certificates.
The report explains that the money supply, known as “M1,” which includes cash traded outside banks and cash deposits in bank current and on-demand accounts, increased by 0.5 percent. It rose from AED795.5 billion at the end of September to AED 799.3 billion at the end of October. This growth was driven by a AED2.5 billion increase in cash traded outside banks and a AED1.3 billion increase in cash deposits.
The report highlights that the overall money supply, referred to as M2, experienced a 0.7 percent increase. This includes the combined value of M1 (cash traded outside banks and cash deposits in bank current and on-demand accounts) and semi-cash deposits (such as term deposits, dirham residents’ savings deposits, and foreign currency residents’ deposits). The total value rose from AED1.908 trillion at the end of September to AED1.922 trillion at the end of October. This growth can be attributed to the increase in the M1 money supply, along with a rise of AED10.4 billion in semi-cash deposits.
Furthermore, the total money supply, known as M3, which includes M2 along with government deposits held with banks operating in the country and the Central Bank, increased by 1.1 percent. It rose from AED2.351 trillion in September to AED2.377 trillion at the end of October 2023, primarily due to the surplus in the M2 money supply and an increase of AED11.2 billion in government deposits.
Additionally, the latest statistics from the CBUAE indicate that the total foreign assets of the bank reached AED600 billion at the end of June, marking a historic milestone. On a monthly basis, the foreign assets increased by 2.4 percent, rising from AED583.84 billion in September to AED597.72 billion at the end of October 2023, representing an increase of AED13.9 billion.
Over the first 10 months of the year, the central bank’s foreign assets showed a growth of 21 percent, equivalent to AED103.8 billion, compared to the end of the previous year. On an annual basis, the assets rose by 40.3 percent compared to October 2022, amounting to AED171.7 billion over the span of 12 months.
Moreover, the rise in foreign assets is attributed to a year-on-year increase of 5.14 percent in bank balances and deposits held with banks abroad, reaching AED367.03 billion at the end of October. This is in comparison to approximately AED349.08 billion in October 2022.
As of the end of October, the foreign securities held in the central bank’s foreign assets amounted to approximately AED166.27 billion. This represents a significant year-on-year increase of about 37 percent compared to AED121.49 billion in October 2022, with a substantial growth of AED44.8 billion.
Furthermore, the central bank’s statistics indicate that other foreign assets reached AED64.42 billion at the end of October. This reflects a year-on-year growth of approximately 10.8 percent compared to AED58.12 billion in October 2022, resulting in an increase of AED6.3 billion.
Notably, the Central Bank clarified that its foreign assets report does not encompass the status of its reserve chip or the International Monetary Fund (IMF)’s special drawing rights (SDR).
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