UAE banking sector profitability on the rise

The UAE banking sector?s profitability has increased as most banks are witnessing a decline in their non-performing assets and significant improvement in liquidity, said a senior official from Institute of International Finance (IIF).

?Soundness indicators of the banking system have improved. UAE banks are well capitalised, their profitability has risen and the liquidity situation eased. It appears to us that the provisioning is on decline,? said Garbis Iradian, deputy director, Africa and the Middle East at the IIF.

While some of the UAE banks? balance sheets are more exposed to bad debts, the overall coverage is more than 93 per cent of the non performing loans, the loans to deposit ratio has been brought down to 90 per cent from more than 130 per cent in 2009.

?A difficult period of balance sheet repair has been completed. Banks went through a period of rising provisioning and clearing of the bad debts. With stronger balance sheet and rising liquidity levels, banks are ready to increase lending,? said George T Abed, senior counsellor and director for Africa and Middle East of IIF.

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