Bank deposits surge 30 per cent in months
Deposits with UAE banks have surged sharply by 25 per cent to 30 per
cent in the past few months due to the federal guarantee and the
stabilising money markets, senior bankers told Emirates Business.
Suvo
Sarkar, General Manager, Retail Banking, Emirates NBD, said the bank's
consumer banking deposits have shown a substantial growth of more than
25 per cent per annum in the first half of the year, significantly
higher than market growth.
"Growth has been across all customer
segments, with account acquisition numbers continuing to be healthy
indicating a stable mass retail franchise," he said.
Sanjoy Sen, Consumer Bank Head - Middle East, Citibank, said the bank has seen a "flood of deposits" in the past few months.
"Our
deposit base has grown by more than 30 per cent in a span of mere four
months. This inflow continues unabated and we see our deposit base
increasing on a daily basis," he said.
Sen said customers have
regained confidence in the banking system. And this, along with the
government's deposit guarantee scheme, have helped banks across the UAE
in retaining funds and attract fresh deposits from other markets.
Citibank,
he said, has also managed to garner substantial deposits from other
markets. The federal government guarantees bank deposits for a period
of three years ending in December 2012. The guarantee applies to
national banks, branches of foreign banks and foreign deposits.
Sen
said the general trend of "chasing deposits" is now over. He said a few
banks would still chase deposits but this will have more to do with
their internal liquidity issues.
Suvo added that retail
customers in general are now looking for higher sustained value from
their banking relationship rather than only higher deposit rates or
lower loan rates.
"In general, we see lesser and lesser number
of customers wanting to change banks for the marginally higher interest
rate," he said.
UAE banks deposit rates have almost halved to
three to four per cent from the peak of six per cent earlier this year.
Falling Eibor rates have contributed to the drop in deposit rates. In
addition, investors and consumers are keener to put their money in the
bank.
"We don't have a diversified asset class in the region.
What do you have? We either have the real estate or the stock market.
So it is best to keep your money in the bank," said Nabil Maaloul, CEO,
Gulf Merchant Bank.
However, although the deposit arena has
proved to be better now compared to the first quarter of this year,
Janany Vamadena, banking analyst at HC Securities andInvestment, said
liquidity in the country remains tight.
She said deposit rates
in the UAE remain "competitive" and it is too early to say whether
there will be a continuous increase in deposits.
"Deposits in the last quarter was high because banks still offer slightly higher rates," she said.
National
Bank of Abu Dhabi CEO Michael Tomalin told Bloomberg that because banks
are tight for liquidity, there is still quite a bidding war for
deposits, and this is keeping interest rates higher than they should be.
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