«Central»: 14.3 billion dirhams increase in deposits during the second quarter

High capital adequacy of banks protects depositors' money

Bank deposits reached 1.866 trillion dirhams at the end of last June.

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The Central Bank confirmed that the capital adequacy ratio for banks operating in the country is recorded at 17.6%, which is much higher than the rate established according to the Basel 3 regulations, estimated at 13%, indicating that the high capital adequacy ratio provides protection for depositors and enhances stability And the efficiency of the financial system for the state economy.

Finally, the Central Bank stated in its monetary and banking developments report for the second quarter of this year that the total capital and reserves of banks operating in the country increased by 3.4% by the end of the second quarter of 2020 to reach 382.5 billion dirhams, compared to 369.9 billion dirhams at the end Previous quarter.

Deposits rise

Despite the negative repercussions that the economy witnessed during the second quarter of this year due to the spread of the Coronavirus, the Central Bank report revealed that bank deposits rose by 14.3 billion dirhams, to reach by the end of last June to one trillion and 866.2 billion dirhams, compared to a trillion And 851.9 billion dirhams at the end of last March.

Blocking wall

Commenting on, the banking and financial expert, Dr. Mohamed Maher, said, “The Central Bank of the UAE has set standards in line with the requirements of Basel, and is keen on adequacy of bank capital at high rates in anticipation of future risks and to cover any exposures or exposure to crises.”

He pointed out that «the solvency of the banking system in the state represented a strong buffer during the (Corona) pandemic, the fever of economic gains in the Emirates, while it is currently contributing to the gradual return of commercial activities and business movement to what it was.

A strong guarantee

For his part, the banking expert, Amjad Nasr, said that “the high capital adequacy in banks constitutes a protection for depositors, as it constitutes a strong guarantee in the event of a loan default, crises or loss,” stressing that “this ratio enhances the efficiency of the performance of the banking sector and raises its ability to Safely finance ».

He added that "this high percentage did not expose the UAE banks to any bankruptcy cases, as happened in major countries, in addition to enhancing the bank’s activity."

Nasr explained that "customer deposits and capital adequacy are two main pillars in the banking sector of any country. This is what we find in the UAE banks, whose banking sector is the largest in the Arab and Gulf countries."

Capital adequacy ratio

Capital adequacy ratio measures the amount of a bank's capital expressed as a percentage of the weighted exposure to risk, provides a high percentage of protection for depositors, and enhances the stability and efficiency of the economy's financial system.

The banks operating in the country began to apply the principles of "Basel 3" as of December 2017, in order to calculate the capital adequacy ratio based on the directives of the Central Bank.

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