UAE banks prepare for rough ride ahead | Financial Times:
Despite a four-year economic slowdown since oil prices collapsed in 2014, the United Arab Emirates’ banks have fared better than other struggling sectors of the economy, such as retail and property.
Higher US interest rates since 2016 — which the UAE currency follows — have boosted profitability, while cost-cutting and financial buffers have insulated lenders against the downturn: in the first half of 2019, profits at the UAE’s four largest banks were up 16 per cent year on year, according to rating agency Moody’s.
Yet the prospect of lower interest rates, as well as rising provisioning costs on bad loans, point towards rougher times ahead.
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| Meydan, the master developer for swaths of desert around the city’s horse racecourse, has billions of dirhams in disputed contracts © Getty |
Despite a four-year economic slowdown since oil prices collapsed in 2014, the United Arab Emirates’ banks have fared better than other struggling sectors of the economy, such as retail and property.
Higher US interest rates since 2016 — which the UAE currency follows — have boosted profitability, while cost-cutting and financial buffers have insulated lenders against the downturn: in the first half of 2019, profits at the UAE’s four largest banks were up 16 per cent year on year, according to rating agency Moody’s.
Yet the prospect of lower interest rates, as well as rising provisioning costs on bad loans, point towards rougher times ahead.
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