UAE credit growth will remain under pressure this year as the debt restructuring of some government related entities (GREs) and high loans to deposit ratios are likely to limit the lending capacity of local banks, according to Standard Chartered officials.
"The loans to deposit ratios of UAE banks are close to 100 per cent while many UAE banks will be involved in the debt restructuring of some of the government related entities, which could curtail their lending, said Shady Shaher, Standard Chartered's economist for the Middle East and North Africa.
The bank officials said although the debt overhang of some of the GREs will continue to be a drag on the UAE economy and the banking sector for some time, the strong recovery of the economy largely driven by trade, tourism and hospitality sectors in Dubai and high government spending in Abu Dhabi will see economic growth gaining traction.
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