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UAE’s Eligible Liquid Assets Ratio on rise

Deposits outvalued loans at UAE-based banks by AED85 billion during the first 11 months of 2018, according to Central Bank of United Arab Emirates.

The Eligible Liquid Assets Ratio rose by the end of November to 17 percent from 16.5 percent in October with the Capital Adequacy Ratio up to 18.2 percent, a significant growth that reflects the UAE banking sector’s robust solvency position.

The continued rise in interest rates over the past period drove demand for deposits, being a safe investment vehicle to earn respectable returns.

According to the CBUAE figures, aggregate deposits at UAE-based banks surged to circa 1.739 trillion by the end of November 2018, AED112 billion up from AED1.627 trillion by the end of December 2017. The growth was driven by an increase in residents’ deposits to circa AED1.535 trillion by the end of November 2018 as compared to AED1.435 trillion by end of December 2017.

In addition, government deposits jumped from AED212 bn to AED303.5 bn during the same period.

On the credit side, total loans hit AED1.653 trillion in November 2018, as compared to AED1.58 trillion by the end of December 2017.

The once-growing gap between loans and deposits started to narrow during the first half of 2017, before liquidity started to rebound by the end of Q3 of the same year, which caused deposits to outvalue loans again.

Source: WAM

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