Wed 09-12-2020 20:16 PM
ABU DHABI, 9th December, 2020 (WAM) -- The total cumulative balance of letters of guarantee issued by banks to other business entities in the UAE significantly grew to AED226.7 bn by the end of September, 2020, an increase of AED15.8 bn, or 7.5 percent approximately, statistics by the Central Bank of the United Arab Emirates have shown.
This significant increase in credit facilities is reflective of the continued business momentum maintained by various economic sectors in the UAE with overseas partners despite the global slowdown witnessed worldwide.
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 total balance of this type of letters at the end of the reference period accounted for 4.9 pct of the total cumulative balance of credit facilities provided by UAE-based banks to other business and commercial sectors in the country.
The apex bank's statistics show Q3 of 2020 as having registered the best business momentum following the business lulls in the preceding period.