Loan growth in the UAE is set to expand in the months ahead as there’s an improved liquidity in the financial system and fiscal third quarter results suggest provisioning for bad loans are beginning to weigh less on banks’ profitability. However, experts say the growth would be stuck in the lower gear, at least in the foreseeable future, since the central bank rules restrict lending to the government and puts limits on personal and retail credit.
“The UAE registered a very rapid credit growth prior to 2008. The current period represents a consolidation period and is expected to persist in 2013,” Giyas Gokkent, chief economist at the National Bank of Abu Dhabi (NBAD) told Gulf News.
He added: “A number of banks have yet to report third quarter results. For those that have reported, we estimate assets were up 11 per cent year-on-year (+3.8 per cent quarter-on-quarter) driven in particular by the largest bank in Abu Dhabi (NBAD). Most of the reporting banks saw an improvement in quarterly profit, but the biggest recovery occurred at Emirates NBD, which registered a bounce from poor 2011 third quarter results.”
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