credit, UAE real estate sales prices, PMI and employment. Table.1.1.a: Real GDP Growth in Selected Country Groups (%). The worsening situation is due to the economic slump in Advanced Economies (-8.0%) as well as the contraction in Emerging and Developing Economies (-3.0%). Meanwhile, the share of national and foreign banks' in customer deposits represented 88.0% and 12.0%, respectively. 3- Disclaimer. Box 1: The UAE Policy Response to Covid-19 Repercussions. With the exception of Bangladesh and Pakistan, where outward personal remittances rose Y-o-Y by 7.0% and 2.1%, respectively, there was a decline by 30.6% for the Philippines, 24.1% for India, and 16.2% for Egypt. The contribution of the non-oil GDP is approximately 70% of the total GDP. According to the REIDIN6 Price Index the average price in the Abu Dhabi housing market declined by 8.1% Y-o-Y in Q2 2020. Meanwhile, the Euro and JPY LIBOR rates remained in negative territory consistent with the policy orientation in the Euro Zone and Japan. Y-o-Y CPI inflation remained negative at -2.3%, driven by negative inflation in non-tradables(-3.9%), owing to the decline in rents and fuel prices, subdued domestic demand, and some exchange rate appreciation vs. the currencies of the UAE's main trading partners. Therefore, the price of Brent Crude declined from USD 32.0 per barrel at the end of March, to USD 18.4 per barrel at the end of April, before increasing to USD 40.3 per barrel at the end of June. The average of 10-year Dirham interest rate swap declined from 2.24% in Q1 to 1.82% in Q2. Y-o-Y, M2 increased in June by 7.9% due to the increase in M1 and the increase in Quasi-Monetary Deposits by 6.8%. Both, the Eurozone and the UK economies are expected to shrink by a high rate (-10.2%), due to the fact that European economies are heavily reliant on tourism and manufacturing exports, which where almost grounded to a halt as the pandemic worsened and cross-border movements were severely restricted. In addition some banks offer discounted pricing for a specific period post which the pricing reverts to one of the below structures: a) EIBOR + Fixed Margin
EIBOR, or the Emirates Interbank Offered Rate, is a daily rate published by the UAE Central Bank. 3.74% p.a. Total assets of national banks expanded by 1.7% Q-o-Q while total assets of foreign banks grew by 3.4%. Meanwhile, foreign banks have a share of 12.1% of the system in terms of assets and 11.0% in terms of gross financing. The UAE Central Bank sets the rate, publishing the current rate on its website every business day by 11am. Figure 1.2.a: Y-o-Y Consumer Price Inflation for Selected Advanced and Emerging Economies (%), US Japan UK EuroareaGermany France India China. United Arab Emirates’s EIBOR: Month End: Fixing: 6 Months data is updated monthly, averaging 1.671 % pa from Oct 2009 to Nov 2018, with 110 observations. The UAE government continued to take all necessary measures to mitigate the persistent impact of the Covid-19 pandemic on the economy. Spread of EIBOR 3-month vs. USD LIBOR 3-month (bps) Figure 4.1.c the 10-year interest rate Swaps (%), Figure 4.1.d Spread 10-year AED Swap vs. USD Swap (bps), Figure 4.2: Change in Monetary aggregates in 2020 Q2 (in billions AED), Table. The downward price pressures resulted from the lost incomes, as these economies lost access to crucial export and tourism markets, and generally lacked adequate social safety nets to support demand. Finally, interest rates continued their decline during the second quarter, while the spread EIBOR vs. USD LIBOR fluctuated around a declining trend. Table 3.2.2: UAE - Sovereign Credit Default Swaps (CDS) (in bps), 6 https://www.centralbank.ae/sites/default/files/2020- 08/Credit%20Sentiment%20Survey%20-%20Q2%202020.pdf, 15 The minimum regulatory requirement for CAR is 13% (10.5% minimum adequacy and 2.5% capital conservation buffer), 8.5%. The central bank of UAE has a panel of 10-12 banks. According to June projections of the World Economic Outlook (WEO), global growth would decline in 2020 to - 4.9% from April's forecast of -3.0% (i.e., 1.9 percentage points lower). This is a testament to the success of the TESS in encouraging banks to help small business adjust to lockdowns, through payment deferrals and access to new credit facilities. Figure 1.2.b: Y-o-Y Consumer Price Inflation for GCC Countries (%), Robust compliance with the OPEC+ output deal reducing oil production, in tandem with a steep decline in production from other non-OPEC+ members, led by the United States and Canada, has cut world oil output by nearly 14.0 million barrels per day since April, while demand fell by 16.4. Deposits at banks increased in the second quarter driven by the increase in government and private sector deposits, while credit growth grew supported by lending to Government Related Entities (GREs). Deposits at UAE banks stood slightly lower at 1.124 trillion dirhams ($306 billion) in May, down 0.4 percent from the previous month, central bank … The Emirates Interbank Offered Rate (EIBOR), also abbreviated as EBOR, is a daily reference rate, published by the UAE Central Bank, based on the averaged interest rates at which UAE banks offer to lend unsecured funds to other banks in the United Arab Emirates dirham wholesale money market (or interbank market).. Tradable prices, accounting for 34% of the CPI consumption basket, increased in Q2 owing mainly to the increase in the price of food and soft drinks; beverages and tobacco; and textile, clothing and footwear. Consistent with the global bullish sentiment, the Abu Dhabi Securities Exchange (ADX) share. 4.1 To meet the user needs, links for other websites have been listed on this Website. Meanwhile, employment declined on average in the second quarter, while marking almost a full recovery in June 2020. United Arab Emirates’s EIBOR: Month End: Fixing: 6 Months data was reported at 3.035 % pa in Nov 2018. Nonetheless, the digitization of financial services led national banks to rely less on branches, whose number decreased from 640 at the end of Q1 to 611 at the end of Q2 2020, while the number of bank Staff decreased by 415 to reach 35,423 employees. In simple words, this is the rate at which a consortium of leading UAE based banks are willing to lend to each other for a specified tenor. 4.2%. Additional longer-termrefinancing operations (LTROs) are also conducted to provide immediate liquidity support to banks and to safeguard money market conditions. 38.2 billion) to reach AED 1,752.3 billion, due to an increase in Government Deposits (16.7% of M3) by 13.5% (AED 35.1 billion) reaching AED 294.3 billion. Further drop of real estate prices in the third quarter before moderating in the last quarter of the year. Central Bank of the U.A.E. In fact, the rate has been rising steadily for a number of months. The 3-month LIBOR on USD continued to fall from 1.45% at the end of March to 0.30% at the end June, mainly due to the impact of the Fed's zero policy rate and further injection of liquidity as the Fed took additional actions to provide up to USD 2.3 trillion in loans to support the economy. 83.5 bps in the first week of May, before declining to 30 bps at the end of the quarter. This was the result of an increase by 0.8% in the price of tradables7 and a significant drop by 3.9% in the price of non-tradables8. ... 1 Month 3 Months 6 Months and 12 Months. The enhanced Targeted Economic Support Scheme (TESS) adopted by CBUAE and the economic stimulus packages announced by both local and federal governments are likely to boost the non- hydrocarbon activities, real estate prices, employment and credit growth with a positive impact on the overall sentiment, once the virus risks are under control (See Box 1 on UAE policy response). According to recent data from Dubai Land Department (DLD) the residential property prices in Dubai, following a Y-o-Y decrease in Q1 2020 by 3.5%, remained roughly at the same level as a year ago in Q2. Moreover, the decline in employment across the UAE, would have further adverse implications on demand. Source: Bloomberg, Emirates NBD Research . Banking and Financial Developments11. LIBOR rates continued to decline while the spread EIBOR vs. USD LIBOR fluctuated around a downward trend. sale prices. The UAE interbank offered rates (Eibor) rose on Sunday following the introduction of a new way of calculating them by the Central Bank. With policy rates at or near zero, in the US, the UK and the Eurozone, monetary authorities preferred not to venture into negative territory, but to purchase more bonds instead. Saudi Arabia's annual inflation rate decreased from 1.1% in Q1 to 0.5% in Q2 of 2020, before the value-added tax was tripled from 5% to 15% on the 1st of July, which is expected to boost inflation in the second half of the year. In the United States, the economy is projected to decline by 8.0% in 2020 due to an escalation in pandemic-related risks, the political deadlock in the U.S. Congress over the fiscal stimulus, uncertainty regarding the coming presidential elections, in addition to the risks associated with the escalating tensions between the United States and China. The world growth outlook was further revised downward in the second quarter due to the impact of Covid-19pandemic, while inflation remained subdued. Eibor 2.55750% ( 1.1825% is the fix margin fix for full term of mortgage + 3 months EIBOR reprised on 1st day of each quarter) 2. In the UAE, 3-month EIBOR decreased from 1.62% at the end of March to 0.76% at the end of June, in line with the decline in the USD LIBOR. 3 Month EIBOR rates also change daily, You can check it on the Central Bank of the UAE’s website here Find out how much you can save on you current mortgages with Today’s EIBOR rate? The Dirham appreciated in nominal and real terms. Meanwhile, non-resident deposits (11% of total deposits) decreased by 7.6%, probably due to declining income worldwide in relation to the Covid-19 pandemic, and the need for some nonresidents to withdraw from their deposit accounts in the UAE. As a result, the UAE average oil production is projected at 2.8 million barrels per day in the year 2020 as a whole. 1.1.b: Year-on-Year Growth Rates in Selected Advanced Countries, Table 2.1.a: Quarterly and Annual GDP Growth Rates in the UAE (Y-o-Y, %), Table 3.1.1.a: Total Deposits at UAE Banks, Table 3.1.2.a: Assets and Credit at UAE Banks, Table 3.1.2.c: Lending by Economic Activity, Table 3.1.3.a: Financial Soundness Indicators in the UAE (in %, unless otherwise indicated), Table 3.2.2: UAE - Sovereign Credit Default Swaps (CDS) (in bps) Table 4.2.1. Figure 1.4 Policy Rates in Selected Economies. Oil prices are expected to further recover, given the reduced supply and pickup in global demand, which is expected to return back to its normal levels by the end of the year (see commodity prices in chapter 1). Customer deposits at the UAE’s 51 banks have risen 2.8 percent this year The average 3-month USD LIBOR fell to 0.61% in Q2 2020, down from 1.54% in Q1 2020. The UAE Central Bank in Abu Dhabi. Fiscal and monetary authorities cooperated to support the national economy. It is projected that the third quarter would register. Central Bank of The UAE shall not be held liable for any loss or damages arising from the use of, or inability to use this Website. There was a reduction in transfers through exchange houses by AED 4.6 billion, while outward remittances through banks increased by AED 0.3 billion. ... their own interest rates whereas banks which are contributing to Eibor will add some profit percentage which is mostly 3-5% to the Eibor rate. The Loan to Deposit (LTD) ratio for the whole banking system increased to 96.0% at the end of Q2, from to 95.5% at the end of Q1 2020. The rental yield measures the rate of income return over the cost associated with an investment (the property price). Money supply increased due to increase in resident deposits as a result of enhanced TESS the bounceback in economic activity by the end of the quarter. In December, the 3-month EIBOR had gained 17 percent to 1.024 percent. 6 REIDIN Residential Price Index in Abu Dhabi covers 7 areas and 5 districts. According to the UAECB, the six-month EIBOR recorded a 47 percent increase by November 27, 2018 as compared to the same time period in 2017, while the one-year EIBOR rose 33 percent over the same time period. The Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% while the size of its bond-buying program was increased from GBP 645 in March to GBP 745 billion in June. Table 3.1.2.c: Bank Lending by Economic Activity. CBUAE calculates the implied rental yield in Dubai, by dividing the annual rent by the average Dubai residential unit, In this chapter unless specified otherwise: (1) all data indicate the. The Central Bank said it expected Eibor rates to decline further. In the UAE, 3-month EIBOR decreased from 1.62% at the end of March to 0.76% at the end of June, in line with the decline in the USD LIBOR. EIBOR is the Emirates Interbank Offered Rate, which is the rate at which banks lend to each other. The Central Bank of the UAE ... 1 week, 1 month, 3 month, 6 month and 1 year. Figure 4.1.b. The average 3-month EIBOR declined from 1.78% in the first quarter to 1.05% in the second quarter. Normally it is the three-month EIBOR used by banks to determine rates, rather than the six-month or one-year EIBOR you will also see quoted there. GB ... 3- Disclaimer. EIBOR. Quarterly data show that the negative growth for the year in developed economies is mostly the result of a large slump in the second quarter, as economic activity dried up and uncertainties remained regarding possible second waves of the pandemic, which is compromising the slow bounceback hoped for in the second half of the year. Exchange Rates US Dollar. Keren Bobker is an Independent Financial Adviser at Holborn Assets and writes at financialuae.me Natural Gas Spot Price-Dollars per Million Btu (RHS). As regards oil production, it increased by 3.7%, in Q1, then it fell by 4.1% in Q2, in line with the agreement by OPEC+. Monetary authorities in emerging economies, meanwhile, seized the opportunity of record low interest rates in international markets to implement several rate cuts in an attempt to boost demand, in tandem with unprecedented local bond purchase programs. Such measures included suspension of eviction in cases of non-payment of the rent or some owners being allowed to extend the term of the lease contract without the need to renew. UAE Central Bank may intervene to reduce Eibor Aabid Hussain 24 February 2010 The analysts have expressed that there is a little chance for a plunge in Interbank borrowing costs to a level more reflective of market lending rates until liquidity improves and economic confidence returns. The implied rental yield4,5 in Dubai moved to 6.3% in the second quarter from 6.5% in the previous quarter. 6 Months 0.502500. 1 International Energy Agency: Oil Market Report, July 2020. EIBOR rates change daily and can be checked on the Central Bank website here. 7 As per CBUAE calculations, tradables include the following categories of goods and services: food and soft drinks; beverages and tobacco; textiles, clothing and footwear; furniture and household goods; transportation; and miscellaneous goods and services. EIBOR One Year 0.531780. Overall GDP growth for the year 2020 is expected to contract by 5.2%, according to CBUAE forecasts.2,3, The non-hydrocarbon GDP is estimated to have declined by 9.3% Y-o-Y in the second quarter, after a drop of 2.7% in the previuos quarter. The level of total liquid assets at banks at the end of Q2 2020 stood at AED 432.4 billion, i.e., AED. Interest rate swaps involve an exchange of a fixed rate for a floating payment that is linked to an interest rate, most often the LIBOR. The EIBOR periods are: overnight, 1 week, 1 month, 3 months, 6 months, 12 months. Meanwhile, the remaining AED 15 billion announced by local governments in several packages aimed at enhancing liquidity at particularly affected activities like retail, foreign trade, tourism and the energy sector. The United Arab Emirates central bank will next month launch a new way of setting Emirates Interbank Offered Rates (EIBOR), helping to make the system more accurate and transparent, a … The 10-year Dirham interest rate swap fluctuated during the second quarter due to increased market volatility and rising risk. Meanwhile in Japan the contraction is estimated at negative 5.8% due to the fact that the containment measures are less stringent. Calculation and Tenors. In Emerging Market Economies, CPI inflation had fallen Y-o-Y by 1.2 percentage points to reach. Chapter 3. Forecast assumptions for the year 2020 are as follows: While the bounceback in economic activity is expected in the second half of the year. Since April 2018, the Central Bank of the UAE has not been acting as the calculating agent of EIBOR and this role has been assigned to Thomson Reuters Ltd as per Notice 75/2018 on "REGULATIONS REGARDING EMIRATES INTERBANK OFFERED RATE (EIBOR) SUBMISSIONS", Â© 2019 Hamilton International Mortagage Consultant - All Rights Reserved. Eibor 2.76727% (1.07273 is the fixed margin for full term of mortgage + 6 months EIBOR re priced on 1st Jan and 1st July semiannually) Which one would you choose and why? Money supply in the UAE in billions AED, Box 1: The UAE Policy Response to Covid-19, Box 2: UAE Small Business Facing Covid-19 Repercussions, Emerging Markets and Developing Economies, Federal Competiveness and Statistics Authority, Organization of Petroleum Exporting Countries. The CBUAE's TESS launched on the 14th March 2020 in the amount of AED 100 billion was expanded with the adoption of the enhanced scheme on the 4th of April to the amount of AED 256 billion. 16 Press Release: Minister of Economy reviews Interim Committee's efforts to deal with impact of Covid-19 on national economy, on 29th July 2020. It is based on the average interest rates offered across all banks in the UAE within a particular period, excluding the two highest and two lowest rates. 2.2 Developments in the Residential Real Estate Market. The world growth outlook for the year 2020 was further revised downward by the International Monetary Fund (IMF), due to the worsening fallout of Covid-19 pandemic. ABU DHABI, The interest rates charged by the Emirates Inter-Bank Offered Rate, EIBOR, have continued their impressive increase since the beginning of the year, with EIBOR set for one-month period posting a significant rise of 19 percent over the past two months, surging to 156 points on December 24 from 131 points in early November, according to UAE Central Bank figures. The non-energy growth is projected by CBUAE at -4.5% for the year 2020 as a whole due to the adverse implications of the Covid-19 on economic activity and sentiments, reflected by PMI, and the slowdown in credit growth. This has risen further since with the rate on January 7 at 1.055 percent. This records an increase from the previous number of 2.969 % pa for Oct 2018. 5.4 Central Bank of The UAE may take the appropriate measures to protect the Website against any loss, abuse or change of information available on the Website, in which case the Central Bank shall not be liable for any damage caused to the user or any other person as a result of disclosure of confidential information shared through the Website. 11.6 billion), reaching AED 900.6 billion, as record low interest rates made term deposits less attractive, while some residents drew down on their savings. Credit growth slowdown in the third quarter and to start recovering slowly after that. In simple words, this is the rate at which a consortium of leading UAE based banks are willing to lend to each other for a specified tenor. The Central Bank published the names of banks that actively participated in the TESS and availed more than 50% of their allocated Zero Cost Facility (ZCF) under TESS. The number of licensed commercial banks remained unchanged in Q2 at 59, comprising of 21 national banks and 38 foreign banks (including 11 wholesale banks). The spread of the 10-year AED vs. USD interest rate swap was fluctuating in the second quarter of 2020, first from 110 bps in early April to 131 bps at the end of the month, before declining to 102 bps at the end of the quarter. Well aware of the particular vulnerability of MSMEs to Covid-19 repercussions on the national economy, the CBUAE's enhanced TESS provided exceptional support to this sector, through: The sector also benefited from the broader set of TESS measures introduced to enhance the financial system stability and liquidity. At banks at the end of 2020 support Scheme, on 29th July 2020 there might revisions. To be negative but at a slower pace of 3.0 %, 1 month 3. Reduction of risk weights applicable to rated SMEs to 75 %, respectively percent on Tuesday innovation and creation! 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