Liquidity and Loan Growth in the Emirates Regain their Pace in 2020’s 3rd Quarter

The total amount of loans during Q3 was overshadowed by the total amount of deposits. The total amount of credit in the Emirates rose up to 0.8%, reaching 1.8 Trillion Dirhams by September’s end. According to the latest data from the central bank, the total amount of bank credit amount went up to 4.9%.

Based on the money supply (M2), it was evident that liquidity had improved in Q3. M2 money supply takes into account currency being moved around outside banks, along with quasi and regular monetary deposits.

According to data, the M3 money supply (which takes into account M2 and governmental deposits made in the central bank and other banks) went up by 3% in Q3. By September’s end, there has been an annual growth of 7.5% in the money supply.

Usually, M2 is taken as the most ideal indicator for gauging economy-wide liquidity availability. This is because M2 includes currency that is being moved outside of banks. Q3’s end had a Q on Q increase in money supply M2 thanks to non-governmental deposits.

Loans and Bank Assets

The total amount of assets held by banks that are operating within the Emirates rose by 2%. From September 2019-2020, the total amount of assets held by banks was up by a value of 7.6%.

In Q3 gross credit went up by a value of 0.8%, going up to 1.8 trillion by September 2020’s end.

Deposits

The total amount of deposits of non-resident/resident customers went up by 2.2%, reaching a value of 1.9 trillion Dirhams. Deposits made by residents rose by 3% while deposits made by non-residents went down by 4.5% by September’s end.

Reserves and Capital

The total reserves and capital went up by 1.9%, going up to 389.8 billion Dirhams by Q3’s end. Despite the fact that the capital conservation buffer stands at 2.5%, banks have the authority to increase it by as much as 60% without consequences. This is effective from 15 March 2020 to 31 December 2021. The buffer for D-SIBs (Domestic Systemically Important Banks) shall remain as it is. However, banks have been given permission to use a 100% of their D-SIB without repercussions. This is effective for the same duration mentioned above for the capital conservation buffer.

By 2020 Q3’s end, foreign assets kept by the central bank went up by 1.7%.