Provisions taken by banks in the United Arab Emirates for non-performing loans increased to the highest level in more than a year and may damp earnings for the country’s lenders in the third quarter.
Provisions for non-performing loans rose 11 percent in the first eight months of 2011 to 49.2 billion dirhams ($13.4 billion) in August, the highest since at least April 2010 when Bloomberg began tracking U.A.E. banking data.
“Profits will be affected because specific provisions in the third quarter of 2011 are likely to be higher than in the same period last year,” Shabbir Malik, Dubai-based research associate at EFG-Hermes Holding SAE, the biggest publicly traded Arab investment bank, said in an e-mailed answer to questions yesterday. “Provisions are still high because businesses continue to restructure their debt.”
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