The total cumulative balance of letters of guarantee and other credit facilities provided by banks and other business entities in the UAE significantly grew to Dh4.53 trillion ($1.2 trillion) in February, according to the Central Bank of the UAE statistics.
A letter of guarantee is a type of contract issued by a bank on behalf of a customer who has entered a contract to purchase goods from a supplier. It lets the supplier know that they will be paid, even if the customer of the bank defaults.
The February figures registered an increase of Dh186 billion (or 4.3 per cent) compared to the previous month's figures of Dh4.34 trillion ($1.18 trillion), it stated.
This significant increase in credit facilities was reflective of the continued business momentum maintained by various economic sectors in the UAE with overseas partners despite the global slowdown witnessed worldwide, stated Central Bank of the UAE.
The apex bank's figures show that the balance of foreign currency derivatives soared to Dh797.2 billion in February 2020, against Dh766.3 in January of the same year.
The balance of interest returns on foreign exchange derivatives likewise increased from Dh2.763 trillion in January to Dh2.928 trillion in February, stated the Central Bank of the UAE figures.
The value of letters of liability provided by banks stood at Dh238.6 in the reference period.
The total balance of letters of guarantee at the end of February valued about Dh382.7 billion while the balance of letters of credit amounted to Dh103.8 billion.-TradeArabia News Service