The amount of cash that UAE banks must set aside for bad debts is expected to peak this year before beginning to decline next year, according to Moody's, the international ratings agency.
That said, Moody's added, the bad debts left over from Dubai World's US$25 billion (Dh91.83bn) debt restructuring are still weighing on the nation's financial system.
"We expect profitability to remain constrained by cautious loan growth and the ongoing provisioning that is required to cover elevated problem loan levels, against a background of mixed signs of a recovery and our expectation that the performance of UAE banks' net earnings will remain uneven over the coming 12-18 months," Moody's said in a report.
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