Total bank deposits held by all UAE banks jumped year-on-year by Dh67 billion this year and loans also recorded a rise of Dh13.6 billion past year, based on the annual information released by the UAE Central Bank on Monday.
Deposits exceeded loans for the third consecutive month in December whilst bank deposits also crossed the Dh1 trillion mark in August. It reached Dh1, 049.6 billion by the end of 2010, compared to Dh982.6 billion as on December 31, 2009.
Total outstanding loans jumped to Dh1031.3 billion by the end of 2010 when compared with Dh1, 017.7 billion in December 2009. Loans suffered a Dh9.4 billion decline in December 2010 compared to previous month. The latest Central Bank information comes just days after its governor Sultan bin Nasser Al Suweidi asserted there is no liquidity dilemma in the market and “liquidity has actually been increasing”.
The information show that the Central Bank assets jumped to Dh1,605.6 billion past year when compared with Dh1,519.1 billion by the end of year 2009, showing an addition of Dh86.5 billion.
UAE banks’ provisions for non-performing loans for the initial time recorded a significant jump during 2010 as these NPLs rose to Dh44.3 billion in December compared to Dh41.2 billion in previous month. Meanwhile, year-on-year decline reached Dh11.7 billion.
The Central Bank, in November, said banks really should book provisions for bad loans quarterly instead of waiting until year-end. NPLs have emerged as a serious concern confronting banks since the financial crisis impacted the economy. It exposed the weaknesses of the banking system where loans are advanced occasionally without thinking much about the health of collaterals.
Despite the fact that the worldwide economic crisis hit UAE banks and their NPLs jumped considerably, the latest results announced by few of the country’s banks show signs of improvement as some lenders are reporting much better results.
Capital adequacy ration during the final quarter of 2010 reached 20.8 percent, according to the Central Bank data. Total number of branches of UAE incorporated banks jumped by 58 to 732 although ATMs within the country rose by 159 to 3,758.
Broad Funds Supply, M2, increased by 0.2 percent, from Dh784.6 billion as at the conclusion of November 2010 to Dh786.4 billion at the end of December of the same year.