UAE banks are falling short on provisions

UAE banks have not set aside sufficient provisions to cover for potential losses in the property sector, experts warn.

Failure to provide adequately for loan defaults helped trigger the spread of the subprime mortgage crisis in the US and led to numerous bank closures.

“We are still seeing low numbers here, basically around 2.5 per cent loan loss provisions to total loans,” said Mardig Haladjian, who heads the GCC banking team for Moody’s Investor Service, the ratings agency.