Banks in the UAE offer offers on deposits

If the value of the deposit is more than three million dirhams, local banks that do business in the country are offering, until the end of October of the following year, to pay interest on deposits of one million dollars at rates of up to 6% per year, provided that the value of the deposit is not less than three million dirhams.

The banks indicated that the interest rates on deposits with a minimum of three million dirhams range from 4.5% for a deposit for a month, then the percentage grows as the time increases until it reaches 5.8% if the period is a full year, and reaches 6% if the period is greater than that. These interest rates are applicable to deposits with a minimum amount of three million dirhams.

According to two banking specialists Today, the primary activity of banks is accepting deposits and granting loans. As a result, banks always try to maintain large levels of liquidity due to their desire to expand financing, which is typically priced at a higher price than the price of deposits, on the one hand, and to anticipate any possible increase in interest rates. On the other hand, before the end of November in the next year.

A State of Liquidity

According to banking expert Ahmed Youssef, some banks are attempting to attract liquidity before the end of next November, which is the date of the meeting of the US Federal Reserve. They are doing this in anticipation of any increase in the main interest rate and the typically subsequent increase in the same rate in the UAE, which is due to the policy of pegging the dirham to the US dollar.

Youssef added that one of the reasons behind banks seeking to attract bank deposits is their desire to expand lending and increase their ability to meet the financing needs of customers, particularly large companies. As a result, the emphasis is placed on attracting those with million deposits, so that they can provide credit in large and sufficient amounts.

He noted that the availability of liquidity in banks does not indicate that banks will cease trying to attract more liquidity, because the primary business of a bank is to accept deposits and to provide loans.

He brought out the fact that the present interest rates on significant amounts range from 5.5% to 6%, depending on the bank's categorization and the period of the deposit.

The economy

For her part, banking expert Awatif Al-Harmoudi stated that banks attract bank deposits with offers for several reasons, the most important of which is the expansion of financing, which is typically at a higher price than what they pay on deposits, which exceeds 7% or more, and as a result, this is reflected in profits, in addition to being one of the tools that banks use to compete with other financial institutions. Monetary policy that is used to restrict the amount of cash that is now available on the market in order to manage the levels of inflation, as well as the interest that accrues to banks if these deposits are invested in anything from securities and bonds to instruments and other financial investment tools.

Al Harmoudi has affirmed that banks in the UAE are enjoying record levels of liquidity, but he has also stated that this does not hinder the banks from continuing to recruit new customers through their ongoing offerings.

unprecedented expansion

The most recent data from the Central Bank shows that bank deposits in the UAE have seen record growth over the past two years, reaching a total of two trillion and 393 billion dirhams by the end of July of last year. This represents the greatest level ever recorded in the history of the banking system.

In addition, the data show that bank deposits are higher than the whole loan portfolio in the industry by a sum equal to 454 billion dirhams. This is despite the fact that the total bank credit reached 1 trillion and 939 billion dirhams by the end of July of last year.

The predominance of deposits over loans is a reflection of the soundness and financial stability of the banking sector. This enables banks to play the crucial function they are expected to play in the national economy, which is to provide funding for individuals and projects.

Read also: UAE Residents Rush to Meet Oct 1 Job Loss Insurance Deadline

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