UAE Islamic banks’ Q1 2023 assets up 7.3%

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The Central Bank of the UAE (CBUAE) said the gross assets of the Islamic banks operating in the country reached $177bn (Dhs650bn) in Q1 2023, a 7.31 per cent year-on-year (YoY) increase compared to Dhs605.7bn the same period a year earlier.

The latest data from the CBUAE reflects an increase in Shariah-compliant banks’ credit to Dhs400.2bn at the end of March, an annual growth of 2.51 per cent compared to nearly Dhs390.4bn in March last year. Monthly, the credit rose by 0.91 per cent from Dhs397bn in February.

The Islamic banks’ deposits jumped 6.2 per cent to Dhs453.4bn in Q1 2023 from nearly Dhs427bn during the same period a year earlier while investments hit a record Dhs111.5bn.

Meanwhile, the total assets of UAE-based conventional banks reached Dhs3.12tn, up 14.1 per cent from Dhs2.73tn in the same period under review.

The country’s conventional banks account for 82.7 per cent of UAE banks’ total assets at the end of March, equivalent to Dhs3.77tn while Islamic lenders held the remaining 17.3 per cent.

Savings deposits in UAE banking

Meanwhile, the central bank said savings deposits in the banking sector surged 7.4 per cent or Dhs18.1bn month over month to Dhs263bn in March, excluding interbank deposits.

On an annual basis, savings deposits in the UAE banking sector jumped 4.7 per cent or Dhs11.8bn, compared to Dhs251.3bn in March 2022.

The local currency, the UAE dirham, accounted for the largest share amounting to Dhs211.6bn or 80.4 per cent of total savings deposits. Similarly, the share of foreign currencies was 19.6 per cent, valued at Dhs51.52bn.

Savings deposits in the UAE banking sector have seen remarkable growth over the years. The central bank said savings deposits in 2018 stood at Dhs152bn. The amount increased to Dhs172.2bn in 2019, Dhs215.2bn in 2020, Dhs241.8bn in 2021 and Dhs245.8bn in 2022.

CBUAE said the demand deposits rose 3.25 per cent or Dhs28.9bn to Dhs918.95bn in March 2023 compared to Dhs890.02bn during the same period a year earlier.

The UAE dirham accounted for 71.8 per cent or Dhs659.64bn of the total deposit demand while the Demand deposits in the UAE banking sector have registered steady growth over the years from Dhs578bn in 2018 to Dhs599.6bn in 2019 to Dhs907.3bn in 2022.

Meanwhile, the central bank’s bulletin revealed that time deposits soared by 29.5 per cent or Dhs150.1bn year-on-year equivalent in March 2023. Monthly, time deposits jumped 3.45 per cent or Dhs22bn from Dhs637.61bn in February.

The local currency accounted for 58.8 per cent or Dhs387.6bn of the total time deposits and the remaining 41.2 per cent or Dhs272.1bn was in foreign currencies.

UAE bank investment

Earlier in June, the CBUAE said bank investments hit a record high of Dhs549bn by the end of March, the highest level in the country’s history.

The central bank’s report revealed that bank investments soared by 16 per cent YoY compared to Dhs473bn in March 2022. Month over month, bank investments jumped 1.3 per cent from Dhs541.4 bn in February.

Securities accounted for the majority of bank investments, around 45.6 per cent or Dhs250.1bn during the period under review.

Held-to-maturity securities accounted for 43 per cent of the total investments to reach Dhs236.3bn in March, a YoY increase of 74.1 per cent compared to Dhs135.7bn in March 2022. Monthly, held-to-maturity securities surged by 2.6 per cent Dhs230.3bn in February 2023.

The bank stock investments reached Dhs11.9bn in March, an 0.8 per cent increase from around Dhs11.8bn in December 2022.