UAE banking sector continues growth trajectory in 2024
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The UAE banking sector continued its growth momentum last year and is poised for further growth and recovery in 2024, thanks to the success of the Central Bank of the UAE (CBUAE) strategies and policies to establish the necessary frameworks and regulations to achieve sustainable growth for the sector, and its commitment to promoting economic and financial stability in the UAE.
During the past year, CBUAE managed to maintain a stable and efficient banking and financial system by providing efficient and effective central banking services. It also achieved record levels of growth in assets, credit, deposits and investments, and maintained strong levels of capital efficiency, provisions and reserves, to ensure compliance with the highest standards of governance, transparency and risk management.
The banking sector has been able to confirm its strength and flexibility to face all global geopolitical and economic challenges and changes. Indicators of growth in assets, financing and capital adequacy ratios reflect the flexibility and resilience of the sector in adapting to the changes that the world is witnessing, as well as its ability to continue its role in providing the right conditions for achieve economic and social development objectives, while ensuring compliance with international standards on governance and risk management.
Bank assets
In Q4 2023, UAE banks’ total assets increased by 3.1% (q-o-q) to AED 4.075 trillion, up 11.1% (q-o-q) from December 2022. Gross credit increased by 0.5% (q-o-q) to AED 1.992 trillion. , with an annual increase of 6.0%. Total deposits grew by 4.2% (q-o-q) and 13.5% (y-o-y) to AED 2.522 billion. Aggregate capital and reserves increased 5.2% (q-o-q) to AED 488.7 billion. The Total Capital Adequacy Ratio stood at 17.9%, exceeding regulatory requirements. This data was reported in the Fourth Quarter Report of 2023 by the CBUAE.
Foreign Assets of the Central Bank
For the fourth quarter of 2023, the UAE Central Bank’s foreign assets increased by 16.7% (q-o-q), reaching AED 681.2 billion, driven by increases in current account balances, deposits in foreign banks and foreign securities. M1 money supply increased by 4.2% (q-o-q) and 12.4% (y-o-y), reaching AED 829.3 billion. M2 money supply grew by 6.0% (q-o-q) and 18.8% (y-o-y), reaching AED 2,023.4 billion. M3 money supply increased by 4.0% (q-o-q) and 16.0% (y-o-y), amounting to AED 2,445.2 billion in December 2023. This monetary development was outlined in the Q4 2023 report of the Central Bank.
Liquid assets
Liquid assets in the UAE banking sector increased to AED 742 billion in the fourth quarter of last year, representing a year-on-year increase of 29% (AED 165.7 billion) compared to the fourth quarter of 2022 On a quarter-on-quarter basis, it increased by 9.6% (AED 64.7 billion) compared to the third quarter of 2023. This increase indicates the ability of banks to meet their short-term obligations, promoting financial stability and confidence. The Tier 1 capital adequacy ratio reached 16.6%, up from 16.2% in the fourth quarter of 2022. Additionally, the Tier 1 common capital ratio increased from 14.4% to 14.9% during the same period.
News source: Emirates News Agency
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