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Moody's expects UAE's banking system to stay negative  Join our daily free Newsletter

MENAFN - 09/11/2012

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(MENAFN) Moody's Investors Service stated that the position of the UAE's banking system continues to be negative, mainly due to asset quality challenges and low provisioning coverage levels, reported Arab News.

Problem loan levels are forecasted to stay high, boosted by exposures to large, stressed, government-related issuers (GRIs), and legacy corporate impairments, chiefly real-estate-related.

The agency said that limited transparency, sizable related-party exposures and high loan and deposit concentrations will make UAE banks vulnerable to name-specific credit risks in the near future.

The country's reliance on oil, trade, services, global logistics and tourism, maintains the local economy sensitive to macro risks of sluggish growth, global recession and low oil prices.

It is worth noting that Moody's expects a modest overall credit growth of 4-7 percent for the current year and 2013, whereas real gross domestic product (GDP) growth for 2012 and 2013 will range between 2-3 percent.

 






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