The United Arab Emirates banks’ assets continued to rise and have reached to Dh1.6 trillion at the end of November 2010. Its banking assets increased 7.5 per cent during this period according to the latest data of the central bank of the UAE published on Sunday.
The Central Bank of the UAE mentioned that at the end of November 2010, Money Supply M1 i.e. currency in circulation plus monetary deposits, i.e., current accounts and call accounts at banks reached at Dh231.4 billion comparing with October 2010.
The data further elaborated and said that the broad money supply, M2 which comprises M1 plus quasi-monetary deposits, the sum of resident time and savings deposits in dirham; commercial prepayments in dirham and resident deposits in foreign currencies, reduced 1.6 per cent month-on-month to Dh784.6 billion in November from Dh797.4 billion as at the end of October 2010, because of a contraction in quasi-monetary deposits by Dh12.8 billion.
For the first 11-months of 2010, the intermediary aggregate M2 increased by 5.9 per cent, which is consistent with current estimates of economic growth and inflation in the UAE the central bank said.
Talking about the credit expansion the central bank shared that it registered a slow growth of 0.3 per cent month-on-month in November 2010 against an overall 2.3 per cent growth in the January to November period.
The banker’s bank said the bank loans and advances, net of provisions and interest in suspense, “increased slightly by 0.3 per cent during the month of November, and increased moderately by 2.3 per cent, during the first 11-months of 2010.
The central bank said that the Abu Dhabi-based financial institutions encouraged public sector corporations to borrow for oil and gas, steel, port construction and other infrastructure related projects during the year, a trend they expected to see in the 2011 also, as several more projects are likely to be awarded.
The growth in total bank assets means that there is liquidity in the market and no fear of credit crunch.
The Minister for Economy, Sultan bin Saeed Al Mansouri recently expected gross domestic product (GDP) to increase up to 3.5 per cent in 2011 high against a forecast of 2.5 per cent in 2010. He also expected the GDP to reach Dh1 trillion by the end of 2010.