Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

US policy change not to hurt UAE banks, says S&P forecast  Join our daily free Newsletter

MENAFN - Khaleej Times - 23/01/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Khaleej Times) The US Fed's potential policy changes will not hurt UAE banks because of their solid funding profiles, Standard & Poor's Ratings Services said on Wednesday while forecasting bright prospects for the sector.



The decision by Fed to gradually end its bond-buying programme could dampen investors' appetite for debt in emerging markets, but it is not expected to cause a major shock for the UAE banking system because banks have solid funding profiles, said S&P analysts



"System-wide funding improved substantially after 2008 as banks in the UAE reduced debt and deposits grew faster than lending," S&P analysts said in its report - UAE banking sector outlook 2014: An uptick in lending and economic activity signal continued profitable growth



The report pointed out that UAE banks' funding profiles had improved substantially over the past four years. "Lending slowed to a trickle following the slump in local real estate and stock markets in 2008, and this led to a noticeable improvement in the banking system's loans-to-deposits ratio." With deposits growing faster, the ratio of net resident loans to net customer deposits declined to about 94 per cent by August 30, 2013, from 111 per cent at year-end 2008. At the same time, banks' already limited dependence on external funds became even lower, S&P said



"We also believe that the UAE banks are generally well placed to handle the effect of potentially higher global interest rates if the Fed changes its monetary policy. The proportion of capital market exposures on UAE banks' balance sheets has been traditionally lower than those of their Western peers, and most of the exposures are fixed-income securities with maximum terms of five years. Therefore, mark-to-market losses following potential rate hikes would be manageable, in our view," it said



Banks in the UAE, underpinned by a healthy economic growth and an upbeat corporate sector, are set for a year of good prospects undeterred by the tapering of the US quantitative easing, the rating agency said




"Real estate prices have been inching upward since late 2012, particularly in Dubai, and banks' credit losses are gradually decreasing," said Standard & Poor's credit analyst Engin Timucin



"Over the past six months, we've also seen signs that credit growth is picking up. We expect these trends to provide banks with another year of strong financial performance, and they support our stable rating outlooks in the sector.



Engin said the key risk factor to watch over the next 24 months would be developments relating to certain large restructured transactions. "Potential nonpayment of these debts could increase some banks' provisioning requirements, thereby reducing their profitability," he said



S&P noted that there could still be bouts of market volatility as the Fed changes its monetary policy. This could reduce the liquidity available to banks and make it more expensive. "We believe, however, that UAE banks should generally remain strong because they still have only marginal net external assets.



Most UAE banks' non-performing loan (NPL) ratios have been stabilising over the past 12 months, after a significant deterioration in asset quality over the past few years, it noted.



"The banks continue to generate strong pre-provision earnings and increase their coverage of reported NPLs, and the incidence of new NPLs has slowed substantially. Although, we generally expect this trend to continue over the next two years, we don't believe it has the potential to trigger positive rating actions at the current rating levels. As such, our outlooks in the sector remain stable," S&P said



After four years of modest credit growth, S&P expects the pace of bank lending to quicken in 2014, with support from healthy economic activity. "We expect real GDP (gross domestic product) growth in the UAE to average about 3.7 per cent annually over 2014.

 


Khaleej Times




  MENA News Headlines
 Jul 31 2016 - Drop in Home Prices in Saudi ArabiaMENAFN
(MENAFN) A continues drop in home prices of Saudi Arabia's biggest cities in the last three months, as a result of the decline in oil profits which puts a pressure on the economy of the ...

 Jul 31 2016 - Clear Growth with 12.2% for Ooredoo OmanMENAFN
(MENAFN) While informing the unaudited results for the H1, the telecom operator announced that, an income growth of 8.9% for H1 this year was registered for Omani Qatari Telecommunications Company ...

 Jul 31 2016 - Sharjah's profits reach USD47 million in H1MENAFN
(MENAFN) announced last Sunday, Bank of Sharjah reported their financial results and affirmed constant clear revenue, for H1 of this year.An increase by 2% in the Sharjah-based bank's net interest ...

 Jul 31 2016 - Decrease in Property Prices in Dubai.MENAFN
(MENAFN) Based on a report by UAE Daily the National, property prices in Dubai fall between 4-6% in Q2, compared to the same period last year. Also, the report confirmed that the market was about to ...

 Jul 31 2016 - UAE to increase its GDP by 4 percent until 2020MENAFN
(MENAFN) The UAE is predicted to recover in 2017 after difficult conditions this year of a strong recovery in economic growth.Accordingly, the country's recovery in oil prices combined with growing ...

 Jul 31 2016 - Qatar to issue USD8bn budget deficitMENAFN
(MENAFN) Qatar is predicted to run a budget deficit of USD8bn, equivalent to 5 percent of GDP this year, which is the smallest amid the GCC States.However, the GCC countries lost USD157bn in oil ...

 Jul 31 2016 - UAE- Bezos pips Buffett to grab billionaire bronze medalKhaleej Times
(MENAFN - Khaleej Times) Jeff Bezos, the founder and chief executive of Amazon.com, has become the world's third-richest person as of the market close for the first time, Forbes magazine said, ...

 Jul 31 2016 - Saudi Zain revenues up 5 percent to USD0.45bnMENAFN
(MENAFN) Zain Saudi Arabia continued growing its revenues and local profit for Q2 this year, compared to the same period last year, which reached USD0.45bn.Furthermore, the firm also posted gross ...

 Jul 31 2016 - US, Qatar trade climbs to USD2.56bnMENAFN
(MENAFN) The US trade surplus with Qatar for the Jan-May period of this year jumped to USD2.56bn, viewing a triple-digit growth compared with last year.Moreover, the US trade balance with Qatar for ...

 Jul 31 2016 - Dunia helps students attain business dreamsKhaleej Times
(MENAFN - Khaleej Times) The students worked to develop their business ideas and plans at the Dunia Young Business Leaders Programme The next generation of entrepreneurs and business leaders ...

more...


 





Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help