By: Mahmoud Gamal

Abu Dhabi – Mubasher: Banks operating in the UAE have increased their investments in the GCC nation’s government bonds by 0.58% year-on-year, or AED 1.2 billion, in the first ten months of 2018, registering AED 206.22 billion ($56.22 billion), compared to AED 205.3 billion ($55.89 billion), according to the Central Bank of the UAE’s (CBUAE) data.

Month-on-month, lenders’ investments in the UAE’s bonds fell 0.43% in October, versus AED 207.4 billion.

Basel III

The hike of the UAE banks’ holdings of government debt instruments, such as bonds, is in line with the implementation of the Basel III standards, which in return shield the banking sector and boost its stability, capital market analyst Basel Abu Teima told Mubasher.

Banks operating in the GCC nation began applying the Basel III rules that will be completely come into force by the CBUAE in 2019.

Abu Teima added that the move is part of the banks’ quest for diversifying their portfolios by boosting fixed income investments such as bond yields in a bid to counter the slippage of global oil prices that still weigh on some economic sectors in spite of their recent recovery.

Equity market

The central bank’s data revealed that lenders’ investments in the stock market dropped 13.2% to AED 10.5 billion from January to October, against AED 12.1 billion in the prior-year period.

While banks’ promissory note investments grew 23.9% to AED 79.1 billion by the end of October, versus AED 63.8 billion in the previous year period.

Translated By: Ahmed Shehata