Saudi Arabia: The UAE’s banking sector witnessed continued momentum in February, as key indicators of liquidity and credit expanded steadily.

Gross banking assets, including bankers’ acceptances, rose by 1.6 percent to 4.63 trillion dirhams ($1.26 trillion), according to data from the Central Bank of the UAE.

Gross credit also saw an uptick, increasing by 0.9 percent to 2.21 trillion dirhams, driven by a 17.1 billion dirham jump in foreign credit and a 1.7 billion dirham rise in domestic credit.

Meanwhile, M1 — the narrowest measure of the country’s money supply — climbed 1.8 percent to 982.9 billion dirhams, supported by gains in both currency in circulation and demand deposits.

The monthly increase was driven by a 13.5 billion dirham gain in monetary deposits and a 4.1 billion dirham rise in currency outside banks. 

M1 — comprising physical currency and current account balances — is a key measure of liquidity immediately available for household and business spending.

The pickup in M1 comes amid a broader expansion in liquidity across the UAE’s financial system, reflecting stable credit conditions and sustained economic activity. The UAE has been supported by robust non-oil growth, rising investment, and steady financial sector performance heading into 2025.

Broader money aggregates also advanced, with M2 — which includes savings and time deposits in addition to M1 — rising 1.8 percent to 2.36 trillion dirhams, supported by a 25 billion dirham increase in quasi-monetary deposits.

M3, which includes M2 and government deposits, grew 0.8 percent to 2.81 trillion dirhams. The rise was primarily driven by the M2 expansion, offsetting a 19 billion dirham decline in government deposits.

The UAE’s monetary base rose 3.1 percent to 816.6 billion dirhams. The increase was supported by an 11.4 percent rise in overnight deposits and current accounts held by banks and financial institutions at the central bank. 

Monetary bills and Islamic certificates of deposit rose 6.2 percent, while currency issuance increased 3.4 percent. These gains outweighed a 6.1 percent drop in reserve account balances.

Within domestic credit, lending to the private sector rose 0.7 percent, and loans to non-banking financial institutions jumped 5.2 percent. These increases offset a 2 percent decline in credit to government-related entities and a 1.4 percent drop in lending to the government sector.

The country’s total bank deposits climbed by 1.2 percent, reaching 2.87 trillion dirhams at the end of February, up from 2.84 trillion dirhams in January.  

This growth was driven by a 0.8 percent rise in resident deposits and a 5.1 percent increase in non-resident deposits.