Moody's Investors Service is maintaining its negative outlook on the banking system of the United Arab Emirates (UAE) because of the ongoing trends of corporate deleveraging, asset quality challenges and the subdued profitability of UAE banks in the wake of continued provisioning needs.
The negative outlook, which is explained in detail in a Banking System Outlook published by Moody's, expresses the rating agency's expectations for the fundamental credit conditions in the banking system over the next 12-18 months.
"Moody's negative outlook on the UAEbanking system is mainly driven by the legacy asset quality challenges related to the ongoing restructuring of some large government-related borrowers," says Khalid Howladar, Vice President -- Senior Credit Officer at Moody's Dubai office and author of this report.
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