(MENAFN- Arab Times) Bank credit continued its upward trend in June, supported primarily by strong growth in household sector borrowing. Meanwhile, the non-financial business sector experienced its smallest gain in five months. Large withdrawals in savings and time deposits, on the other hand, have led to a contraction in the broader measure of money (M2). We still expect credit to register growth of 7% or more in 2013, the strongest showing since 2009. Total bank credit rose by a sturdy KD 189 million in June to KD 28 bn, with year-on-year (y/y) credit growth slipping slightly from last month to 6.2%. Total credit was up KD 1.17 billion so far this year compared to an increase of only KD 749 million during 1H12. Annualized growth in 1H13 reached 8.9%, up from 5.9% a year ago. Growth in household borrowing (personal facilities excluding loans for the purchase of securities) remained strong gaining by KD 123 million in June. Monthly gains have been consistent, averaging KD 100 million over the last twelve months. Growth (y/y) accelerated to a recent record high of 18.6%, pushing the sector's share of total credit to 28%. Borrowing for the purchase of securities saw an unusually strong increase in June, offsetting last month's large drop. This segment accounted for a large portion of the June gain in credit (up KD 47 million), though growth (y/y) remained flat at 0.3%. Meanwhile, credit to non-bank financial institutions resumed its deleveraging dropping by KD 17 million, with credit down 19.1% from a year ago. The June gain in non-financial business activity (KD 35 million) was the smallest in five months but came in the wake of a particularly strong gain in the previous month. Though growth (y/y) in business credit eased to 5.3%, it continued to reveal an improving trend over the last year. The trade sector and "other" segment accounted for most of the gains. Meanwhile, real estate, crude oil & gas, and construction saw large declines following noticeable gains the previous month. Private sector deposits were down KD 97 million in June on seasonal outflows. The declines were visible in time and saving deposits, which fell by KD 311 million and 98 million, respectively. By contrast, sight and foreign currency deposits were up. Despite the June drop, deposits were still up by KD 2.1 billion in the first half of 2013 and 11% year-on-year. The largest contributions came from foreign currency and sight deposits, which grew by 49% and 19% from a year ago. Meanwhile, low interest rates continued to weigh on time deposits which grew by a smaller 3.8%. Broad money (M2) saw its first contraction in nearly a year falling in June by KD 122 million (-0.4%). Growth (y/y) still accelerated to 11.2%. The narrower measure (M1) saw an increase of KD 157 million, on gains in demand deposits. Deposit rates on dinar time deposits remained steady at current low levels. Average rates for 1-month deposits remained unchanged at 0.56%. The 3-month, 6-month and 12-month deposit rates fell between a basis point (bp) and 2 bps and averaged 0.74%, 0.94% and 1.12%, respectively.