The UAE banking sector continued its growth momentum in 2023, and is poised for further growth and recovery in 2024, thanks to the Central Bank of the UAE's (CBUAE) strategies and policies that maintained a stable and efficient banking and financial system, a report said.

The CBUAE also saw record levels of growth in assets, credit, deposits and investments, and maintained strong levels of capital efficiency, provisions and reserves, to ensure compliance with the highest standards of governance, transparency and risk management, Emirates News Agency, WAM, said.

The banking sector has been able to confirm its strength and flexibility in dealing with all global geopolitical and economic challenges and changes.

The indicators of rising assets, financing and capital adequacy ratios reflect the sector's flexibility and resilience to adapt to the changes the world is witnessing, a statement said.

Assets

At the end of the fourth quarter of 2023, total assets of banks operating in the UAE increased by 3.1% (q-o-q), reaching AED 4.075 trillion. During the period between December 2022 and December 2023, the total assets of banks operating in the UAE increased by 11.1% (y-o-y).

According to the 4th Quarter Report of 2023 issued by the CBUAE on the Monetary, Banking & Financial Markets Developments, gross credit increased by 0.5% (q-o-q), reaching 1.992 trillion at the end of December 2023.

On an annual basis, gross credit increased by 6.0%. At the end of December 2023, total deposits of resident and non-resident customers with banks operating in the UAE rose by 4.2% (q-o-q) and annually by 13.5% (y-o-y), reaching AED 2.522 trillion.

Capital & Reserves

Aggregate Capital and Reserves of banks operating in the UAE increased by 5.2% (q-o-q), reaching AED 488.7 billion at the end of the fourth quarter of 2023.

At the end of December 2023, Total Capital Adequacy Ratio stood at 17.9%, remaining well above the 13% Capital Adequacy Ratio, including the 2.5% Capital Conservation Buffer requirement and the 8.5% Tier1 Ratio, prescribed by the Central Bank regulations in compliance with the Basel III guidelines.

Foreign Assets

At the end of the fourth quarter of 2023, the Central Bank’s foreign assets increased by 16.7% (q-o-q), reaching AED 681.2 billion.

This rise was attributed to quarterly expansions in Current Account Balances and Deposits with banks abroad by 27% (a quarterly increase of AED 94.4 billion) and in Foreign Securities by 10.6% (a quarterly rise of AED 17.9 billion).

Monetary Developments

Money Supply M1, which comprises Currency in Circulation outside Banks (Currency Issued - Cash at banks) plus Monetary Deposits, increased by 4.2% (q-o-q) during the fourth quarter of 2023.

On an annual basis, there was 12.4% (y-o-y) hike in the monetary aggregate M1, reaching AED 829.3 billion at the end of December 2023.

Money Supply M2 (M1 plus Quasi Monetary Deposits (Resident Time and Savings Deposits in Dirham, plus Resident Deposits in Foreign Currencies)), grew by 6.0% (q-o-q) during the fourth quarter of 2023.

On an annual basis, there was 18.8% (y-o-y) increase in Money Supply M2, reaching AED 2,023.4 billion at the end of December 2023.

Money Supply M3 (M2 plus government deposits at banks and at the Central Bank) also rose by 4.0% (q-o-q) during the fourth quarter of 2023.

On an annual basis, there was a 16.0% (y-o-y) rise in Money Supply M3, reaching AED 2,445.2 billion at the end of December 2023.

Liquid Assets

Liquid assets in the UAE banking sector rose to AED742 billion at the end of the fourth quarter of last year, an increase of 29% y-o-y or AED165.7 billion, compared to AED576.3 billion at the end of the fourth quarter of 2022.