Credit extended by banks in the United Arab Emirates increased by AED72.4 billion in August, the Central Bank of the UAE reported. Gross credit rose 2.6% during the month to AED2.871 trillion. Domestic credit advanced 2.8% to AED2.269 trillion, while foreign credit grew 1.6% to AED602.6 billion. The monthly expansion was led by households and companies rather than by government borrowing alone.
Lending to individuals increased 5.6%, or AED34.4 billion, while corporate credit grew 2.4%, or AED22.8 billion. Government borrowing rose 2.8%, equivalent to AED7.2 billion. By comparison, the central bank's July report had put gross credit at AED2.799 trillion after a 1.5% monthly increase. The August data therefore showed a faster pace of lending growth than in the preceding month.
CREDIT EXPANSION BROADENS
Domestic credit reached AED2.269 trillion, with individuals making the largest disclosed contribution to the increase. Corporate lending also accelerated, indicating that the expansion extended beyond consumer borrowing. Foreign credit reached AED602.6 billion, adding to the overall rise but growing more slowly than the domestic book.
Total bank deposits increased 0.7% to AED3.535 trillion in August. Resident deposits rose 1.0% to AED3.229 trillion, including a 3.5% increase in government deposits to AED461.1 billion and a 0.7% rise in private-sector deposits to AED2.362 trillion. Gross bank assets increased 1.3% to AED5.741 trillion.
LIQUIDITY MEASURES ALSO INCREASE
The monetary base expanded 4.2% to AED825.9 billion. Banks' and other financial corporations' current accounts and overnight deposits at the central bank rose 66.9% to AED156.1 billion. Broad money M2 increased 0.7% to AED2.920 trillion, while M3 also rose 0.7% to AED3.466 trillion.
Credit grew more quickly than deposits during August, narrowing the system's deposit funding margin without eliminating it. The data indicate that household and corporate demand supported the month's balance-sheet expansion. The release of September data will show whether the acceleration in individual lending persisted and whether deposit growth kept pace.