Bank loans soar by Dh13bn in September

Domestic credit by UAE banks surged by around Dh13 billion in September to record one of the largest monthly increases since the 2008 global fiscal distress.

Deposits with the country’s 51 banks also recorded one of their biggest monthly growth rates in September following a large decline in June.

Figures by the Central Bank showed the surge in loans and deposits boosted the combined assets of the operating 23 national banks and 28 foreign units by around Dh33 billion in September to retain their position as largest Arab banking sector.

From around Dh1,090.5 billion at the end of August 2011, total loans provided by the banks operating in the second largest Arab economy swelled to nearly Dh1,103.2 billion at the end of September, an increase of about 1.2 per cent month-on-month and three per cent since the end of 2011, the report showed.

Lending also was up by around 2.6 per cent year-on-year, indicating credit is gradually picking up in the UAE. But credit growth remained a fraction of the lending level during the boom years of 2007-2008, when it leaped by at least 30 per cent.

The report showed personal loans edged up by 0.2 per cent in September and by nearly 3.8 per cent in the first nine months of 2012 to reach Dh261.7 billion.

Deposits climbed to one of their highest levels of around Dh1,143.8 billion at the end of September from Dh1,127.1 billion at the end of August. Deposits had swelled by nearly Dhseven billion in July following a decline of about Dh18 billion in June.

The report showed UAE banks are pushing ahead with a provisioning drive to consolidate their position, allocating around Dh1.2 billion for non-performing loans (NPL) provisions in September. This boosted the total loan loss provisions taken by the banks to a record Dh65.4 billion, an increase of Dh10.1 billion in the first nine months.

With their combined capital standing at Dh278.2 billion at the end of September, the largest in the Arab banking sector, the overall capital adequacy ratio of UAE banks stood at as high as 21.2 per cent in September, according to the Central Bank which put Tier 1 adequacy at 17.2 per cent.

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