Picture used for illustrative purpose only.
The UAE Central Bank has announced that gross bank assets, including bankers’ acceptances, rose by 0.6 per cent, climbing from Dhs2958.6 billion at the end of June 2019 to Dhs2975.8 billion at the end of July 2019.
Gross credit increased by 0.7 per cent from Dhs1692.7 billion at the end of June 2019 to Dhs1704.9 billion at the end of July 2019.
During July 2019, total bank deposits grew by Dhs3.3 billion, attributable to an Dhs 6.3 billion rise in Non Resident Deposits, dominating the decline of Dhs3 billion in Resident Deposits.
The Money Supply aggregate M1 decreased by one per cent, from Dhs507.9 billion at the end of June 2019 to Dhs502.7 billion at the end of July 2019.
The Money Supply aggregate M2 rose by 0.9 per cent, from Dhs1351 billion at the end of June 2019 to Dhs1363.8 billion at the end of July 2019.
The Money Supply aggregate M3 decreased by 0.2 per cent, from Dhs1645.4 billion at the end of June 2019 to Dhs1642.5 billion at the end of July 2019. The fall in M1 was due to the decrease of Dhs4.2 billion and Dhs1 billion in Monetary Deposits and Currency in Circulation Outside Banks respectively.
M2 rose mainly due to an increase of Dhs18 billion in Quasi-Monetary Deposits, overriding the decrease in M1. M3 declined due to an Dhs15.7 billion decrease of Government Deposits, overriding the increase in M2.
Meanwhile the value of total reserves in the UAE Central Bank rose to around Dhs305 billion at the end of the first half of 2019, compared to Dhs298 billion in May, an increase of 2.5 per cent.
According to the “Banking Indexes Report” issued by the bank on Monday, this increase was due to the rise in the value of certificates of deposit, from Dhs147.1 billion to Dhs155.8 billion at the end of June, while the total balance of current accounts in Emirati banks increased to Dhs24.7 billion.
Meanwhile, the balance of reserve requirements in Emirati banks decreased from Dhs126.3 billion in May to a current value of Dhs124.8 billion.
With regards to credit, the report highlighted an increase in the total balance of credit provided to the industrial and commercial sector, amounting to around Dhs815.6 billion at the end of June, a rise of 1.1 per cent compared to the previous month, while the government’s credit value reached Dhs201.6 billion.
Meanwhile, the balance of the UAE Central Bank’s deposit certificates rose to record levels during the first half of 2019, reaching around Dhs155.8 billion at the end of June, according to statistics issued by the bank highlighting its policy of withdrawing surplus liquidity. The value of surplus liquidity withdrawn in June amounted to around Dhs8.8 billion.
The UAE Central Bank withdrew surplus liquidity in the market during the first three months of the current year, due to the high level of surplus liquidity in the country’s banking system. The bank usually withdraws liquidity to prevent banks from investing them in ways that do not align with the country’s monetary policy, which it applies to serve the national economy.
The bank’s statistics show that the value of liquidity withdrawn since the start of 2019 until the end of February amounted to around Dhs8 billion before it reversed this policy in March, when its balance of deposit certificates amounted to approximately Dhs139.2 billion.
In April 2019, the bank again began to withdraw liquidity, which continued in May and June.
Deposit certificates are used by the bank to achieve its monetary policy goals and manage liquidity in the market, in addition to other tools for controlling monetary movement and serving the national economy.
Last month the UAE Central Bank has announced it will lower interest rates applied to the issuance of its certificates of deposits in line with the decrease in interest rates on the US dollar, following the US Federal Reserve’s decision.
The repo rate applicable to borrowing short-term liquidity from the UAE Central Bank against certificates of deposits has also been decreased by 25 basis points, said the apex bank in a statement.
Certificates of deposit, which CBUAE issues to banks operating in the country, are the monetary policy instrument through which changes in interest rates are transmitted to the UAE banking system.