The outlook for the banking system of the UAE remains negative, says Moody's Investors Service in a new Banking System Outlook published on Wednesday. The main drivers of the outlook are asset quality challenges, especially for the Dubai-based banks and low provisioning coverage levels. Moody's expects problem loan levels to remain elevated, driven by exposures to large, stressed, government-related issuers (GRIs), and legacy corporate impairments, primarily real-estate-related, which are still emerging after failed attempts to restructure earlier in the crisis.
Moody's says that the negative outlook also captures specific structural weaknesses that will continue to undermine system-wide bank performance over the 12-18 month outlook period. In Moody's view, issues such as limited transparency, sizable related-party exposures and high loan and deposit concentrations will continue to leave UAE banks vulnerable to name-specific credit risks in the near term despite recent guidelines published by the Central Bank of the UAE.
No comments:
Post a Comment