Central bank said today that, since last month, UAE bank loans increased by 0.5% in the month of June, while deposits slid 1.1%.

The bank said on its Web site that after rising 0.6% the month before, bank credit - excluding provisions for bad loans - increased to AED1.01 trillion (US$275 billion). Deposits dropped to AED961.7 billion; and, at the same time, provisions for bad loans increased by 4.4% to AED23.9 billion.

Monica Malik, senior economist at EFG-Hermes Holding SAE, Egypt's biggest publicly traded investment bank, said by phone from Dubai today: "Credit growth is still weak but positive. Banks still show a high level of risk aversion, especially to personal loans and we believe that most of the credit growth is coming from the corporate sector." Malik predicted that, in the year 2009, the bank credit will grow by 12%, down from approximately 60% growth in the initial nine months of 2008.

Central bank Governor Sultan Bin Nasser al-Suwaidi said in an interview on 15 July that the current U. A. E. economy is stronger than it was nine months before; however, it would likely contract this year.

Today, the central bank said that, as compared to the previous month, June saw M3 money supply drop by 0.65, when it expanded 1%. The bank also said that compared with 3.6% a month earlier, M1 money supply increased by 1% in June.