Banks in the UAE are sitting on a huge pile of cash deposits, but are reluctant to open their doors to needy borrowers while capital injection by financial institutions is a must to further boost the economy, according to analysts.
Opinions were divided on whether banks would start increasing lending this year or they would continue to maintain the wait and see strategy. But majority of analysts expect credit growth this year.
“The interbank market is very liquid. All the banks are flooded with liquidity whether it is foreign or local customer deposits,” a treasurer at an Abu Dhabi-based bank told Reuters. “You now face a situation where banks have sufficient cash to lend and corporates now have more profitable projects in which to utilise that cash,” said Mark Watts, head of fixed income at National Bank of Abu Dhabi Asset Management Group. “That is a very good driver for a return to normal markets."
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