Central Bank of The UAE
Written by Dhwani Mehta
The UAE’s banking sector is experiencing a boom, with savings and deposits showing a healthy upward trend.
Particularly noteworthy is the significant growth in savings deposits. The first quarter of 2024 (Q1-2024) saw a remarkable AED 13.8 billion flow into UAE banks, excluding interbank deposits. This impressive growth translates to a 5.1% increase compared to the end of 202. There has been an 8.9% year-on-year since March 2023. By the end of March 2024, total savings deposits reached a healthy AED 286.67 billion, reflecting a positive trend for the UAE’s financial landscape.
The good news doesn’t stop there. Demand deposits, which are readily accessible funds, also witnessed a positive trajectory. They reached AED 1.056 trillion at the end of March 2024, reflecting a significant annual growth of 15.02% compared to March 2023. This translates to an increase of AED 138 billion, demonstrating a strong appetite for holding liquid assets within the UAE banking system.
Time deposits, which offer higher interest rates in exchange for a fixed investment period, saw a substantial increase as well. By the end of March 2024, they reached AED 840.1 billion, representing a remarkable annual growth of 27.4% compared to March 2023. This significant rise suggests that UAE residents are increasingly looking for instruments offering a return on their investments while maintaining a degree of security.
The CBUAE data also reveals interesting insights into the composition of deposits. The majority of demand deposits, approximately 71.7%, were held in UAE dirhams, with the remaining 28.3% in foreign currencies. Time deposits mirrored a similar trend, with 57.5% denominated in UAE dirhams and 42.5% in foreign currencies. This indicates a continued trust in the local currency alongside a healthy diversification of holdings.
This consistent growth in deposits across all categories reflects a growing confidence in the UAE’s banking sector and the broader economy. The CBUAE’s data paints a picture of a financially robust environment, potentially attracting further foreign investments and fostering economic stability.
The UAE’s banking sector appears to be on a strong footing, poised to support continued economic growth in the region.
Further Reading:
UAE banking sector attracts $3.8 billion in new savings deposits in Q1 2024 – Economy Middle East
UAE-National Bonds announces highest-ever return on savings in 2023 – Khaleej Times