Economy, property to boost UAE banks

An improving economy and a robust property market will boost the profitability of UAE banks significantly during the current year and years ahead, according to industry specialists.

Bank lending to the private sector in the country will grow more than 300 per cent to 8.4 per cent in 2014 compared to 2.3 per cent in 2012, according to a latest report by the International Monetary Fund.

Moody?s, on the other hand, predicted highe-*r credit growth for next year compared to the IMF?s estimates. ?Economic growth, combined with increasing confidence and the ongoing real estate market recovery, will support credit growth of seven to 10 per cent in 2014,? the agency said.

The ratings firm also upgraded its outlook on the UAE?s banking system from negative to stable on Wednesday. Improving economy and property market looks likely to increase profitability and reduce the number of problem loans, it said in a report.

The outlook change reflects the continued improvements in the operating environment, as well as the ongoing recovery of the local real estate market, which Moody?s believes will lead to a decline in problem loan levels and an increase in profitability over the next 12 to 18 months. Banks will continue to maintain high liquidity and capital buffers that were built up since the onset of the global financial crisis, it added.

via Business – Economy, property to boost UAE banks.