Deposits in UAE Banks Surge to $120 Billion in H1 2017

Press release
Published August 14th, 2017 - 09:01 GMT
According to Central Bank data, short-term deposits secured progressive growth since the beginning of 2016. (File photo)
According to Central Bank data, short-term deposits secured progressive growth since the beginning of 2016. (File photo)

Short-term deposits in UAE banks increased by AED27.9 billion during H1, bringing to AED439.7 billion the total value of short-term deposits by the end of June, according to UAE Central Bank statistics.

The term 'Short Term Deposit' refers to an amount of money placed in a bank or financial institution for a term no longer than one year. It will usually earn a fixed rate of interest.

According to Central Bank data, short-term deposits secured progressive growth since the beginning of 2016, with the month of March seeing the highest hike worth AED14.6 billion, ratcheting their total value to AED439 billion from AED424 billion in February, when they were up by AED8.7 billion.

In April, short-term deposits hit an all-time high of AED442 billion, an increase of AED3 billion against the previous month. In May, they declined by AED5 billion before rebounding in June to AED439.7 billion, an increase of AED2.5 billion over the previous month.

Short-term deposits account for 30 percent of total bank deposits in UAE banks, which surged to AED1.46 trillion by the end of H1, according to UAE Central Bank figures.

Meanwhile, consumer spending in the UAE is expected to grow at a compound annual growth rate (CAGR) of 7.5 percent over the next five years to top US$261 billion by 2021, thanks to a growing population, the Dubai Chamber said in a report.

“The UAE‘s consumer market is largely being driven by a fast-growing population with relatively high incomes, which are key economic fundamentals that support a robust long-term outlook for spending growth in the country,” Hamad Buamim, the chief executive of Dubai Chamber, said in the report.

Last year, the UAE had the highest consumer spend per household in the Arabian Gulf region, amounting to $103,000, followed by Bahrain with $96,000.

Consumer spending represented 45 percent of UAE’s GDP, compared with 39 percent average for the Gulf region, 45 percent for developing Asia, 56 percent for the European Union and 68 percent for the US.

The housing segment topped spending last year, with $75.7bn and representing 41 percent of total expenditure, followed by food and non-alcoholic beverages in second place with $24.8bn, and transport with $16.7bn.

Communication is projected to have the fastest-growth at a CAGR of 10.2 percent by 2021, thanks to the high mobile penetration rates and other digital services here.

Health goods and medical services will have the second fastest-growing segment, with a projected CAGR of 8.2 percent, followed by hotels and catering with a CAGR of 8.1 percent, education with CAGR of 8 percent and with CAGR of 7.7percent, according to the chamber's report.

Background Information

Central Bank of United Arab Emirates

The Central Bank of the UAE (CBUAE) promotes financial and monetary stability, efficiency and resilience in the financial system, and the protection of consumers through effective supervision that supports economic growth for the benefit of the UAE and its people.

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