An increase in bond investment and gold sales boosted the UAE Central Bank's net earnings by nearly Dh30 million last year despite interest rates being at rock bottom levels.
From Dh527.7 million ($143.7 million) in 2002, the Central Bank's net profits grew to around Dh559.2 million ($152.3 million) last year, its annual balance sheet showed. However, the profits remained far below 2001 earnings of nearly Dh1.11 billion ($302 million) as a result of a sharp drop in interest revenue.
A breakdown showed a steep decline in interest revenues but they were offset by the sale of gold reserves and higher income from bond investments.
The report showed the income from interest rates plunged to Dh461.9 million ($125.8 million) in 2003 from Dh573.1 million ($156.1 million) in 2002. Gold sale fetched the bank around Dh221.1 million ($60.2 million) last year while earnings from other investments increased to Dh15.04 million ($4.09 million) from Dh13.1 million ($3.56 million).
Interest expenses were slashed to Dh170 million ($46.3 million) from Dh231.9 million ($63.2 million) in the same period.
The bank said return on its foreign assets last year was higher than the average US yield, as it stood at 1.25 per cent compared with 1 per cent in the US. "This is because the Central Bank is pursuing a policy of investment diversification by investing part of its foreign assets in bonds abroad," it said.
From Dh5.5 billion ($1.49 billion) at the end of 2002, the bank's investment in bonds more than doubled to around Dh11.3 billion ($3.07 billion) at the end of last year.
The surge in such investments was at the expense of the Central Bank's deposits with other banks, which dived to nearly Dh42.8 billion ($11.66 billion) at the end of last year, from around Dh49.2 billion ($13.4 billion) previously.
Foreign assets, excluding its bond portfolio, swelled to around Dh54.2 billion ($14.76 billion) from Dh49.2 billion ($13.4 billion) in the same period after the purchase of more dollars from the local UAE banks and governments.
"Those assets grew by nearly 10.2 per cent during that period and accounted for around 99 per cent of the bank's overall assets at the end of 2003," it said, according to Gulf News.
"The increase was a result of the bank's decision to increase its purchases of the US dollar from the local governments and banks as well as the increase in its net profits. (menareport.com)
© 2004 Mena Report (www.menareport.com)
