The United Arab Emirates' (UAE) banking sector provided a significant boost to the country's trade and industrial sectors in the first quarter of 2024. According to the Central Bank of the UAE (CBUAE), credit facilities offered by national banks to these sectors reached AED 15. 6 billion (approximately $4. 25 billion) during the three-month period, reflecting a 2. 1% increase compared to the fourth quarter of 2023. This growth indicates the UAE's banking system's continued support for domestic businesses, playing a key role in driving economic activity.
The CBUAE's data revealed a positive trend in credit allocation to trade and industry. The cumulative credit balance for these sectors reached AED 757. 4 billion by the end of March 2024, up from AED 741. 8 billion at the close of December 2023. This represents a quarter-on-quarter growth of AED 9. 3 billion and a year-on-year increase of AED 22. 2 billion, signifying a promising outlook for business expansion in the UAE.
The report further highlights the dominance of national banks in financing trade and industrial activities. They contributed a substantial 90% of the total credit extended to these sectors in Q1 2024, amounting to AED 841. 7 billion. This underscores the crucial role that national banks play in supporting the core industries that drive the UAE's economic diversification efforts. The remaining 10% of the credit, valued at AED 84. 3 billion, originated from foreign banks operating within the UAE, showcasing the collaborative nature of the country's financial sector.
The geographical distribution of the credit facilities also offers insights into the UAE's economic landscape. Banks in Abu Dhabi provided the largest share of credit at AED 374. 1 billion in Q1 2024, followed closely by Dubai's banks at AED 363. 3 billion. Banks in other emirates collectively contributed AED 104. 3 billion to the credit pool for trade and industry sectors. This distribution reflects the significant economic contributions of both Abu Dhabi and Dubai, while also acknowledging the growth potential in other emirates.
The CBUAE's data on credit allocation to trade and industry sectors paints a positive picture of the UAE's economic outlook in the first quarter of 2024. The increasing credit facilities extended by banks signal strong support for business activity and potential growth within these sectors. This, coupled with the geographical distribution of the credit, reflects the UAE's commitment to fostering economic diversification and propelling the nation's overall economic development.