An increase of 10.1% year-on-year

43.8 billion dirhams increase in liquid assets at banks within a year

The state's banking system has maintained good capitalization.

archival

The Central Bank reported that the total liquid assets of banks operating in the country amounted to 476.2 billion dirhams at the end of the second quarter of this year, an increase of about 10.1% on an annual basis, equivalent to 43.8 billion dirhams, which was recorded at the end of June of last year, which was estimated at 432.4 billion dirhams.

liquid assets

In its latest quarterly report, the Central Bank clarified that the eligible liquid assets include the mandatory reserves imposed by the Central Bank, in addition to certificates of deposit and cash bonds held by banks with the Central Bank, as well as zero-risk weighted government bonds, public sector debt and cash with banks.

lend

In its report, the Central Bank indicated that while credit faced a contraction on an annual basis, and remained below pre-Covid-19 levels, it rebounded on a quarterly basis through lending to companies, small and medium-sized enterprises and individuals, and deposits continued to grow.

He added that in general, the financial safety indicators remained in good condition, and thus the banking system shifted towards more support during the recovery phase of the UAE economy, stressing that the country's banking system maintained good capitalization, with an average capital adequacy ratio of 17.5%.

flexibility

In addition, a banking official, who preferred not to be named, stated that the importance of banks' liquid assets lies in giving flexibility to the banking sector to support the economy in general and companies and individuals in particular by increasing the ability to grant loans and various facilities.

The official told "Emirates Today", that the banking sector in the UAE is one of the most solvent and capitalized, with ratios exceeding the requirements of "Basel III", which represents a strong wall against any financial problems that may face the global economy, noting that this was evident in passing Understanding the repercussions of the Corona pandemic.

positive thing

The official added that the increase in liquid assets during the "Corona" year is a positive thing for banks and reflects the abundance of liquidity, in addition to the banks themselves employing some of these liquid assets and obtaining a return in return such as certificates of deposit or purchase of bonds or others.

He explained that what distinguishes these assets is that they are easy to monetize, meaning that they can be converted into immediate cash in a short time.

The official stated that the Central Bank imposes on banks certain percentages of their deposits to be in the form of mandatory reserves to face crises, but at the same time it allows them to withdraw from them if they need liquidity or face a shortage, pointing out that the banks of the banking sector in the UAE are among the largest and strongest of the Where liquidity is Gulf and Arab.

instant cash

Assets in the form of certificates, bonds or debts are easy to liquidate tools and can be converted into instant cash to support various liquidity requirements if needed by banks.

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