Bank credit soars Dh18.4bn in Sept

Bank credit surged by Dh18.4 billion in September to record one of their highest monthly growth rates since local banks tightened their lending purses in the wake of the 2008 global fiscal distress, official data showed on Thursday.

From Dh1,056.8bn at the end of August, total loans provided by the UAE’s 23 national banks and 28 foreign units swelled to Dh1,075.2bn at the end of September, a month-on-month increase of 1.7 per cent and a 4.3 per cent growth since the end of 2010, the central bank said in a new report.

It was the largest monthly credit increase in more than a year and one of the largest since the eruption of the global fiscal crisis in September 2008.

The central gave no explanation for the sharp rise which is in sharp contrast with the tight lending policy adopted by the country’s banks since the 2008 distress and ensuing regional debt default problems.

Year-on-year credit growth stood at 3.5 per cent at the end of September, a tiny fraction of the more than 30 per cent growth recorded during the two years that preceded the global crisis. Banks in the UAE and other Gulf oil producers were had been expected to resume normal lending this year but are apparently concerned about the debt crisis in Europe and the downgrading of the US.

Growth in domestic credit in September was in contrast with deposits, which shrank by around one per cent to Dh1,067.3bn from Dh1,078.4bn. The increase also boosted credit above deposits and narrowed the loan-to-deposit ratio from around 97.9 per cent at the end of August to about 100.7 per cent at the end of September.

The report showed total bank assets edged up to around Dh1,672.1bn at the end of September from Dh1,670.4bn at the end of August, maintaining the position of UAE banks as having the largest asset base in the Arab region.