Delayed bad debts hinder UAE banks

Banks in the United Arab Emirates will have to contend with mounting bad debts into next year, which will eat into the profits and the capital adequacy ratios of local institutions, according to Fitch, the credit ratings agency.

Local banks remain well capitalised – largely thanks to robust federal government support – say Fitch analysts in a report yesterday. However, the financial crisis hit the region with a lag and the economic impact has yet to be fully felt by the local industry, the agency says.

The combined net income of the eight largest national banks in the UAE reached Dh8.8bn in the first half of the year, and the overall non-performing loan ratio remains low at 2 per cent.