Lending to the private sector contracted for the third consecutive month in June
Public-sector credit growth remains dominant, according to UAE monetary statistics for June, with funding support flowing primarily to the government and government related entities (GREs).
According to the latest monthly monetary statistics released by the Central Bank of the UAE, lending to the public sector rose by a further 3.1 percent month-on-month (m-o-m) in June to lift the annualised growth rate to 23.7 percent year-on-year (y-o-y).
Meanwhile, lending to GREs rose by 1.0 percent m-o-m in June and by a significant 25.2 percent y-o-y. In contrast, lending to the private sector contracted for the third consecutive month in June, taking claims on the private sector down 0.1 percent m-o-m and -0.7 percent y-o-y, led by a 2.2 percent y-o-y fall in lending to households.
The UAE Central Bank, which has announced about $70 billion worth of economic stimulus to help businesses cope with the coronavirus outbreak, has temporarily relaxed key requirements to improve liquidity and funding needs of banks to support the economy.
Banks will be allowed to go below the 100 percent Net Stable Funding Ratio (NSFR) but not below 90 percent, and above the 100 percent requirement for Advances to Stable Resources Ratio' (ASRR) but no higher than 110 percent, until December 31 2021.
The NSFR is a liquidity standard requiring banks to hold enough stable funding to cover the duration of their long-term assets and the ASRR measures loans and advances as a share of stable sources of funding,
Abdulhamid M. Saeed, Governor of the Central Bank of the UAE, said: “The relaxation of the two structural liquidity ratios aims to further facilitate the flow of funds from banks into the economy. This measure will support the implementation of the already adopted TESS measures worth AED 256 billion."
"The temporary relaxation of NSFR and ASRR will supplement the other measures CBUAE has taken under the TESS to mitigate the impact of the COVID-19 pandemic on private corporates, small and medium-sized enterprises and individuals,” he added.
0 comments