UAE bank assets surpass Dhs4.4 trillion by September-end

The Central Bank of the UAE (CBUAE) revealed that Gross banks’ assets, including bankers’ acceptances, increased by 0.5 per cent from Dhs4,378.0 billion at the end of August 2024 to Dhs4,401.7 billion at the end of September 2024.

In its Monetary & Banking Developments Report for September 2024, the apex bank said Gross credit increased by 2.3 per cent from Dhs2,112.9 billion at the end of August 2024 to Dhs2,161.9 billion at the end of September 2024. Gross credit increased due to increases in domestic credit by 1.6 per cent and foreign credit by 6.9 per cent.

Domestic credit expansion was brought about by increases in credit to the; government sector by 0.4 per cent, public sector (government-related entities) by 2.7 per cent, private sector by 1.5 per cent and non-banking financial institutions by 1.8 per cent.

Banks’ deposits increased by 0.8 per cent, from Dhs2,740.5 billion at the end of August 2024 to Dhs2,761.4 billion at the end of September 2024.

The growth in total bank deposits was the result of the increase in resident deposits by 0.8 per cent and in non-resident deposits by 0.5 per cent.

Resident deposits grew as a result of increases in government-related entities deposits by 4.9 per cent, private sector deposits by 0.8 per centand non-banking financial institutions deposits by 20.5 per cent, overriding the decrease in government sector deposits by 3.9 per cent.

The bank also announced that the money supply aggregate M1 increased by 0.9 per cent, from Dhs888.0 billion at the end of August 2024 to Dhs896.3 billion at the end of September 2024. This increase was mainly due to Dhs2.0 billion increase in currency in circulation outside banks and Dhs6.3 billion growth in monetary deposits.

The money supply aggregate M2 increased by 1.7 per cent, increasing from Dhs2,211.1 billion at the end of August 2024 to Dhs2,249.6 billion at the end of September 2024.

M2 increased because of an elevated M1 and Dhs30.0 billion growth in Quasi-Monetary Deposits.

The money supply aggregate M3 also increased by 0.9 per cent, from Dhs2,696.3 billion at the end of August 2024 to Dhs2,719.8 billion at the end of September 2024.

M3 expanded mainly due to the growth in M2, overshadowing the Dhs15.0 billion decrease in government deposits.

The monetary base expanded by 1.2 per cent, from Dhs734.9 billion at the end of August 2024 to Dhs743.5 billion at the end of September 2024.

The growth in the monetary base was driven by increases in; currency issued by 1.0 per cent and banks & OFCs’ current accounts & overnight deposits of banks at CBUAE by 39.2 per cent, overriding the reduction in reserve account by 14.1 per cent.

Whereas, monetary bills & Islamic certificates of deposit remained constant at Dhs240.9 billion.

UAE payments  industry: The UAE’s payments industry is poised to achieve significant growth, with total revenues projected to reach $27.3 billion by 2028, according to the latest Global Payments Report 2024 by Boston Consulting Group (BCG).

Despite a global slowdown in growth rates, the UAE continues to lead in the GCC, driven by its rapid digital transformation and strategic investments in the financial sector.

The Global Payments Report 2024 marks BCG’s 22nd annual analysis of the global payments industry, emphasising the need for decisive action in navigating a rapidly evolving landscape. The report aptly titled Fortune Favors the Bold highlights the importance of adapting to shifting customer expectations, heightened regulatory scrutiny, and technological disruptions. While growth is slowing globally, the UAE remains a bright spot in the region, continuing its high growth and innovation trajectory.

Globally, payments revenue growth is projected to slow significantly, with CAGR halving to 5 per cent through 2028, resulting in a global payments revenue pool of $2.3 trillion. This marks a sharp decline from the 9 per cent CAGR observed over the previous five years, which pushed the global revenue pool to $1.8 trillion in 2023.

North America and Europe are expected to experience the most significant slowdowns, with projected annual revenue increases of just 3 per cent. In contrast, regions like the Middle East, Latin America, and Asia-Pacific are forecasted to see higher growth, with the Middle East projected to grow at a 7 per cent CAGR, driven by accelerating digital payments in emerging markets.

The UAE’s payments sector has seen robust growth in recent years. From 2018 to 2023, the country’s payments revenue grew from $9.8 billion to $18.8 billion, with a CAGR of 13.8 per cent. By 2028, the UAE is projected to reach $27.3 billion in revenues, marking a 45 per cent increase over the next five years. Transaction volumes in the UAE are also forecast to rise significantly, from 1.7 billion in 2023 to over 3.1 billion by 2028, representing a 78 per cent increase. The shift from cash-based to digital payments, spurred by government initiatives and increased fintech adoption, continues to drive this expansion.

WAM