Bank lending across the UAE continued to expand in July, with gross credit increasing by Dh41.2 billion, or 1.5 per cent, to reach Dh2,798.9 billion by the end of the month, according to the latest data from the Central Bank of the UAE (CBUAE).
The increase in lending came as business activity showed signs of recovery. The seasonally adjusted UAE Purchasing Managers’ Index rose to 52.7 in July from 50.8 in June, marking its strongest improvement in business conditions in four months. The recovery was supported by stronger customer demand, easing regional tensions and increased spending by clients.
Domestic credit rose by 1.4 per cent to Dh2,206 billion, while foreign credit increased by 1.8 per cent to Dh592.9 billion. Domestic lending accounted for 1.1 percentage points of overall credit growth, with foreign lending contributing 0.4 percentage points.
Higher lending to the private sector was the main factor behind the increase in domestic credit.
Credit extended to individuals climbed by 2.3 per cent, or Dh13.9 billion, making it the largest contributor to domestic credit growth. The increase accounted for 0.6 percentage points of the overall rise.
Corporate lending also recorded growth, increasing by 1.1 per cent, or Dh10.9 billion, and contributing 0.5 percentage points to domestic credit expansion.
Government borrowing rose by 1.7 per cent, equivalent to Dh4.2 billion, adding another 0.2 percentage points to domestic credit growth.
The banking sector also recorded higher deposits during July. Total deposits held by UAE banks increased by 1.1 per cent, rising from Dh3,472.8 billion at the end of June to Dh3,509.8 billion at the end of July.
Resident deposits increased by 0.5 per cent to Dh3,198.4 billion, while non-resident deposits rose by a much stronger 6.8 per cent to Dh311.4 billion.
Among resident deposits, private sector balances provided the largest contribution, rising 0.7 per cent to Dh2,344.4 billion. Deposits from Government Related Entities increased by 3.7 per cent to Dh347.3 billion.
Government sector deposits stood at Dh445.4 billion, while deposits from other financial institutions reached Dh61.3 billion.
The expansion in lending and deposits was accompanied by growth in the banking sector’s balance sheet. Gross bank assets increased by 1.3 per cent during July to Dh5,669.1 billion.
The monetary base also expanded by 1.2 per cent to Dh792.7 billion. Reserve balances held by UAE banks with the central bank increased by 4.7 per cent during the month, reaching Dh256.9 billion.
The latest figures point to continued expansion in UAE banking activity, supported by stronger domestic lending, rising deposits and improving business conditions.
