Monday, Jul 04, 2011

Gulf News

Abu Dhabi: Bank deposits, loans and advances have decreased, according to latest data released by the UAE Central Bank.

The UAE Central Bank revealed yesterday that deposits decreased 0.4 per cent to Dh1,123.5 billion in May compared to April, while total bank loans and advances fell by 0.5 per cent over the same period, to Dh1,048.7 billion.

Meanwhile, money in circulation increased and money supply decreased from April to May.

Speculation

Analysts have speculated that the marginal reduction in bank loans suggests a reluctance on the part of individuals and businesses to pursue further lending.

It seems the banks high interest rates and service charges are discouraging individuals and businessmen from taking loans, Dr Mohammad Amerah, an Abu Dhabi-based economist told Gulf News.

But during the first five months of 2011, intermediary monetary aggregate M2 as well as bank deposits increased by 7.0 per cent, while bank loans and advances increased by 1.7 per cent, the apex bank said in a statement.

Total bank assets increased 0.5 per cent over a month in May to Dh1,703.5 billion.

The UAE Central Bank also said the money supply M0 (currency in circulation plus currency at banks) increased 0.4 per cent to Dh50.5 billion in May compared to Aprils Dh50.3 billion.

Money supply

However, for the same period the money supply M1 (currency in circulation plus monetary deposits) decreased 0.2 per cent to Dh260.6 billion from Dh261.2 billion.

Regarding the money supply M2, which comprises M1 plus quasi-monetary deposits (the sum of resident time and savings deposits in dirhams, commercial prepayments in dirhams and resident deposits in foreign currencies), it decreased 1.1 per cent to Dh841.4 billion in May from Dh850.5 billion in April.

As well, the Central Bank said the money supply M3 (M2 plus government deposits at the banking sector) fell 0.6 per cent in May to Dh1,070.0 billion from Dh1,076.1 billion in April, according to latest data released by the UAE Central Bank.

By Himendra Mohan Kumar, Staff Reporter

Gulf News 2011. All rights reserved.