UAE Bank Lending Surges To Dh2.8 Trillion As Non-Oil Economy Rebounds

(MENAFN- Khaleej Times) Bank lending across the UAE continued its upward climb in July, with gross credit rising by Dh41.2 billion, or 1.5 per cent, to reach Dh2,798.9 billion by the end of the month, according to the latest Central Bank of the UAE (CBUAE) data.

The credit surge came alongside a broader economic rebound, with the seasonally adjusted UAE Purchasing Managers' Index climbing to 52.7 in July from an over five-year low of 50.8 in June, as business conditions improved at their fastest pace in four months on the back of stronger customer demand, easing regional tensions, and increased client spending.

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The growth was broad-based, with domestic credit climbing 1.4 per cent to Dh2,206 billion, while foreign credit rose 1.8 per cent to Dh592.9 billion. Domestic lending contributed 1.1 percentage points to overall credit growth, with foreign credit adding a further 0.4 percentage points.

Individuals lead the borrowing spree

The expansion in domestic credit was largely fuelled by higher lending to the private sector.

Credit extended to individuals rose by 2.3 per cent, or Dh13.9 billion, contributing 0.6 percentage points to the overall increase – the single largest driver of domestic credit growth.

Lending to corporates also gained pace, rising 1.1 per cent (Dh10.9 billion) and adding 0.5 percentage points, while government borrowing increased by 1.7 per cent (Dh4.2 billion), contributing 0.2 percentage points to domestic credit expansion.

Bank deposits climb

Deposits held with UAE banks rose 1.1 per cent during the month, increasing from Dh3,472.8 billion at the end of June to Dh3,509.8 billion by the end of July.

Resident deposits edged up 0.5 per cent to Dh3,198.4 billion, while non-resident deposits recorded a sharper 6.8 per cent jump to Dh311.4 billion, underlining continued confidence among overseas depositors in the UAE's banking system.

Within resident deposits, private sector balances made the largest contribution to growth, rising 0.7 per cent to Dh2,344.4 billion. Deposits from Government Related Entities (GREs) increased 3.7 per cent to Dh347.3 billion, while government sector deposits stood at Dh445.4 billion and deposits from other financial institutions came in at Dh61.3 billion.

Gross bank assets increased by 1.3 per cent to reach Dh5,669.1 billion at the end of July, while the monetary base rose 1.2 per cent to Dh792.7 billion. Reserve balances held by banks with the Central Bank of UAE climbed 4.7 per cent to Dh256.9 billion during the month.

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