Boosting bank deposits is “critical” to lending in the Emirates, with bankers saying they would like to replace customer deposits with cash injections from the Government and wholesale funding.
The ratio of loans to deposits held by banks grew to 112 per cent last month, according to the latest data from the Central Bank. Lending has all but stopped since large amounts of speculative money was withdrawn in the aftermath of the collapse of Lehman Brothers in the US last year. The result has been a credit squeeze, further aggravating the slowdown.
“It is most important for us to stabilise sources of funding. Whether they come in the form of customer deposits or in any other form, that is going to be the critical aspect for us to continue to grow our lending,” said Sanjay Uppal, the chief financial officer at Emirates NBD.
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