Dubai: The UAE’s banking sector maintained steady growth in spite of volatility across global markets and regional challenges and it is expected deliver strong profitability in this year and the year ahead, Abdul Aziz Al Ghurair, Chairman of UAE Banks Federation said on the sidelines of sixth annual Middle East Banking Forum in Dubai on Sunday.
Al Ghurair expects the UAE banking sector to maintain loan growth in excess of 5 per cent this year. With most banks have cleaned up the legacy non-performing assets from their balance sheets and improved asset quality, going forward, he expects financial performance of banks to improve, report agencies.Nine-month bank results broadly confirm that banks have either fully provided for the problem loans linked to the small and medium enterprise sector and or deleveraged substantially from their exposure troubled segments of business.
With economic growth starting to pick up again on the back of higher oil prices and production, as well as increased government spending, Al Ghurair said banks are seeing a revival in credit demand from corporates, government and government related entities (GREs), although overall retail loan growth is expected to remain anaemic.
A recent forecast by Institute of International Finance has pegged the sector-wide loan growth above 6 per cent. The 12-month increase in credit was 3.7 per cent, thanks to improvement in lending to the corporate sector and in deposits 8.4 per cent in September 2018. The acceleration in deposits growth was mainly to the substantial increase in government deposits in the banking system.
Rating agencies and independent analysts confirm a steady revival in the financial performance of UAE banks, thanks to the rising interest rates and the improving macroeconomic conditions in the country.