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UAE banks extend AED72.5bn in loans in 7 months

Year continues to see unprecedented expansion in lending, signalling a pickup in economic activity.

The value of new loans that banks in the United Arab Emirates extended in the first seven months of the current year picked up by 5.2 per cent to AED72.5 billion.

In July alone, the value of loans amounted to AED3.9bn, up by 0.3 per cent, Al Bayan reports citing industry sources.

Bankers say this year continues to see unprecedented expansion in lending, signalling a pickup in economic activity and restoration of confidence in investing in the country.

Banks’ assets edged up by 4.4 per cent or AED103bn during the same period to AED2.4 trillion compared with AED2.3trn at the end of December of last year.

The gap between loans and deposits stood at AED2.4bn or 0.2 per cent of the total value of credit facilities. Central bank sources said the gap between loans and deposits is well covered by banks’ capital and reserves.

According to the report released by the UAE central bank, the total value of deposits dropped to AED1.43trn from AED1.44trn in June.

The report indicates the money supply (M2) rose by 3.8 per cent or AED43.6bn during the seven-month period to stand at AED1.18trn from AED1.14trn at the end of December last year.

(M2) is a key indication of liquidity in the economy since it covers cash outside banks in addition to deposits by the private sector.