Slack economic growth in the Emirates is expected to mean a lacklustre quarter for the UAE's banks, analysts say, as investors instead turn to lenders in Qatar and Saudi Arabia in search of better profits.
As the second quarter ends, the UAE is expected to have registered another poor quarter of loan growth, said Shabbir Malik, a banking analyst at EFG Hermes. "I'm not very excited about loan growth," he said. "What I'm looking for is an easing of provisions. We saw some of that in Q1, and if we see a more sustained downwards trend that will be positive for the sector."
A slowdown in government spending this year has limited the ability of the private sector to expand and has also reduced borrowing requirements.
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