A teller at a bank in Dubai
A teller at a bank in Dubai. On an annualized basis, total bank credit increased by 4.9 per cent, the latest central bank data showed. Image Credit: Gulf News Archives

Dubai: Total credit in the UAE increased 0.8 per cent quarter-on-quarter, reaching Dh1.8 trillion at the end of September. On an annualized basis, total bank credit was up 4.9 per cent, the latest central bank data show.

Liquidity improved in the third quarter as reflected by money supply (M2), which is currency in circulation outside banks plus monetary deposits and quasi monetary deposits (residents' time and savings deposits in dirham plus deposits in foreign currencies).

The data show total money supply M3 (M2 plus government deposits at banks and at the central bank) rose 3 per cent quarter-on-quarter during the third quarter. On an annual basis, there was a 7.5 per cent growth in money supply to Dh1.805 trillion at the end of September.

Typically, M2 is considered the best indicator for the availability of liquidity in the economy, as it comprises currency in circulation outside banks, in addition to various deposits of all the resident sectors in dirham, except for those of the government.

At the end of the third quarter, there was a quarter-on-quarter increase in M2, mainly driven by a 0.5 per cent quarterly increase in non-government resident deposits at Dh1.37 trillion.

Bank assets, loans

Total assets of banks operating in the UAE increased by 2 per cent quarter-on-quarter, reaching Dh3.25 trillion. During the period between September 2019 and September 2020, total assets of banks were higher by 7.6 per cent.

Gross credit in the third quarter increased by 0.8 per cent, reaching 1.8 trillion at the end of September 2020.


Total deposits of resident and non-resident customers with banks operating in the UAE rose 2.2 per cent quarter-on-quarter reaching Dh1.9 trillion. Resident deposits increased 3 per cent, reaching Dh1.71 trillion, while non-resident deposits fell by 4.5 per cent to Dh191.3 billion by the end of September.

Capital and reserves

Aggregate capital and reserves increased by 1.9 per cent (q-o-q), reaching Dh389.8 billion at the end of the third quarter. Total capital adequacy ratio stood at 18 per cent, remaining well above the 13 per cent mandated, including the 2.5 per cent capital conservation buffer requirement and the 8.5 per cent Tier1 Ratio, prescribed by the Central Bank regulations in compliance with Basel III guidelines.

Although the capital conservation buffer remains at 2.5 per cent, banks are allowed to tap it up to a maximum of 60 per cent without supervisory consequences, effective from March 15, 2020 until December 31, 2021. The Domestic Systemically Important Banks’ (D-SIBs) buffer remains the same; however, they are allowed to use 100 per cent of their D-SIB buffer without supervisory consequences, effective March 15, 2020 until December 31.

At the end of the third quarter of 2020, the Central Bank’s foreign assets increased by 1.7 per cent (q-o-q), reaching Dh356.6 billion.