Abu Dhabi: The letters of guarantee issued by banks and other business entities in the UAE amounted to Dh5.3 billion during the first eight months of 2019, a growth of 5.3 per cent as compared to December 2018, according to the Central Bank of the UAE.

A letter of guarantee is a type of contract issued by a bank on behalf of a customer who has entered a contract to purchase goods from a supplier. It lets the supplier know that they will be paid, even if the customer of the bank defaults.

Driven by economic upswing across all business platforms, the total value of these letters stood at Dh105.14 billion in August, according to the banking regulator’s figures.

The Q1 of 2019 saw UAE banks issuing letters of guarantee worth Dh3.1 billion, with Q2 witnessing Dh2.2 billion worth of guarantees, bringing their total value to Dh107 billion in July.

In August, their value declined to Dh105.144 billion after a number of individuals and institutions fulfilled their financial commitments.