Today's Edition
YOUSEF AL BUSTANJI (ABU DHABI)
The total assets of the UAE's banking sector increased by Dh378 billion during the year, equivalent to a growth of 10.7%, reaching Dh3.901 trillion at the end of August 2023, compared to Dh3.523 trillion at the end of August 2022, according to data issued by the Central Bank of the UAE (CBUAE) on Tuesday.
The increase in banking assets is attributed to the increase in liquidity levels available to the sector that can be pumped into new financing operations and expansion in investments, which is considered an indicator of national economic recovery and the growth of local business sectors.
According to the data, banks operating in the country injected new financings of Dh102.3 billion during the year, recording a growth in the credit portfolio by 5.5% to reach a total balance of Dh1.953 trillion at the end of August 2023, compared to Dh1.851 trillion at the end of August 2022.
Financing the private sector, banks operating in the country injected approximately Dh72 billion in loans and new financing into the private sector, with a growth of 6.2% during the year, to reach a balance of Dh1.24 trillion at the end of August 2023, compared to Dh1.168 trillion at the end of August 2022. On the other hand, the balance of banking deposits rose to Dh2.403 trillion at the end of August 2023, compared to Dh2.166 trillion at the end of August 2022, recording a growth of 10.9%, equivalent to an increase of Dh237 billion during the period.
This is an indicator of the continued flow of liquidity to the local market on the one hand, and the increase in confidence in the strength and solidity of the UAE banking sector on the other hand. Additionally, the CBUAE's foreign assets increased by Dh147.4 billion, recording a growth of 33.7% during the year, to reach Dh585.1 billion in August 2023, compared to Dh437.7 billion in August 2022, according to the CBUAE data.
Foreign Assets
The CBUAE's foreign assets also increased due to the improvement of the national economy's competitiveness in its commercial and financial relations with foreign markets and the surplus in the country's balance of payments. Foreign assets constitute the largest part of the CBUAE's international reserves, which rise with the support of export growth, the inflow of foreign capital into the domestic market, the growth of the tourism sector, the increase in the income of the service sector, and the improvement of the balance of financial transfers entering and exiting the country during the same period.
Bank balances and the composition of foreign assets of the CBUAE show that bank balances and deposits in banks abroad have increased by Dh99 million, representing an annual growth of 39%, to reach Dh352.23 billion at the end of August 2023 compared with Dh253.25 billion at the end of August 2022.
The balance of foreign securities held by the bank also increased by approximately Dh44 billion, a growth of 34.2%, to reach Dh172.42 billion at the end of August 2023, compared with Dh128.48 billion at the end of August 2022. Other foreign assets also increased by about Dh4 billion, to reach Dh60.45 billion last August, compared to Dh56 billion in August 2022.
Total Assets
Furthermore, the data shows that the total assets of the CBUAE increased by Dh145 billion, recording an annual growth of 29.2%, to reach Dh641.6 billion last August, compared with Dh496.7 billion in August 2020. The increase in total assets was supported by the increase in cash and bank balances, which increased by Dh32 billion during the same comparison period, a growth of 14%, to reach approximately Dh260 billion. The balance of deposits increased by Dh67.3 billion, equivalent to a growth of 124%, to reach Dh121.5 billion at the end of August 2023, compared to Dh54.2 billion at the end of August 2022.
In addition, the CBUAE's investments increased by approximately Dh44 billion, equivalent to a growth of 25% during the period in question, to reach Dh218.33 billion at the end of August.
Liabilities
On the liabilities side, the CBUAE's balance sheet shows that the balance of current accounts and deposit accounts of banks operating in the country increased by Dh83.2 billion, equivalent to a growth of 38% on an annual basis, to reach Dh301.6 billion at the end of August, compared with Dh218.4 billion at the end of August 2022. Current accounts and deposit accounts of banks rise due to the increase in liquidity levels available to the banking sector in the country.
The balance of treasury bills and Islamic deposit certificates with the bank also increased by Dh43.9 billion, a year-to-year growth of 30%, to reach Dh189.6 billion at the end of August, as a result of the increase in basic interest rates, which reached one of its highest levels in more than two decades.
Data shows that issued banknotes and coins increased to Dh126.6 billion at the end of August last, compared with Dh113.2 billion at the end of August 2022, an increase of about Dh13.4 billion over a year and a growth of 11.8%.
Liquidity
Data shows that total liquidity in the country increased by Dh279 billion, a growth of 13.8%, to reach Dh2.295 trillion at the end of August 2023, compared with Dh2.016 trillion at the end of August 2022. In addition, the money supply, which includes cash deposits, private term deposits, balances of current accounts, and cash circulating outside banks, increased by Dh233 billion during the same period, to reach a balance of Dh1.86 trillion at the end of August 2023, compared with Dh2.166 trillion at the end of August 2022.
