Letters of guarantee, credit facilities hit AED108 bn in January

ABU DHABI, The increase in value of the account of letters of guarantee and credit, liabilities and other credit facilities provided by banks to companies amounted to AED108 billion in January 2020, raising the total cumulative balance to AED4.35 trillion from December 2019, according to statistics issued by the Central Bank of the UAE, CBUAE.

This significant increase reflects the activity of overseas transactions last year.

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.

The value of letters of liability provided by banks increased from AED210.8 billion in December 2019 to AED239.2 billion in January 2020, a growth of 13.5 percent The balance of foreign currency derivatives totalled AED766.3 billion in January, an increase of AED 66.2 billion compared to December of 2019 while the balance of interest returns on foreign exchange derivatives increased from AED2.753 trillion to AED2.764 trillion during the same monitoring period.

The total balance of letters of guarantee at the end of January was about AED385.9 billion while the balance of letters of credit amounted to AED101.7 billion.

Source: Emirates News Agency