RIYADH: UAE-based banks attracted over 54 billion dirhams ($14.7 billion) in short-term deposits during the first five months of the year, marking an 8.9 percent increase from December 2023, official data showed. 

According to the latest data from the Central Bank of the UAE, “three-month deposits” reached 659.01 billion dirhams by the end of May, as reported by the Emirati news agency WAM. 

These deposits, which are held for a fixed period of three months and typically offer a fixed interest rate, accounted for a significant portion of the banking sector’s short-term funds. 

National banks dominated this segment, holding 90.9 percent of the total, equivalent to 598.9 billion dirhams, while foreign banks held 9.1 percent, or 60.02 billion dirhams, WAM reported. 

This comes as the UAE’s leading banks continue to show robust capital positions, bolstered by strong profitability and improved asset quality in the second quarter. 

Profitability surged to 21.5 billion dirhams, driven by higher net interest income and a significant drop in impairment charges, according to New York-based global professional services firm Alvarez & Marsal.

The newly released central bank figures also disclosed that financial institutes based in the Gulf country attracted 18.1 billion dirhams in term deposits during the first five months to reach 227.71 billion dirhams at the end of May, reflecting a growth of 8.6 percent compared to December. 

Term deposits refer to investment products offered by banks where funds are deposited for a specified period or term at a fixed interest rate.

National banks accounted for 89.9 percent of term deposits, worth 204.8 billion dirhams, and foreign institutions accounted for 22.8 billion dirhams, equivalent to 10.1 percent.

The figures further showed that term deposits of more than six to 12 months attracted about 15.2 billion dirhams from January to reach about 275.89 billion dirhams at the end of May, an increase of about 6 percent since December. 

National banks accounted for 92.2 percent of term deposits, equivalent to more than 254.4 billion dirhams, while foreign banks accounted for 7.8 percent, equal to 21.42 billion dirhams.

In March, the central bank said that the UAE’s financial system is more secure and efficient than ever before thanks to the widespread implementation of technology. 

In its report for the fourth quarter of 2023 released at the time, the body said that technological and structural advancements in the country’s banking system have elevated operational efficiency and accessibility of mobile applications and online banking.