S&P: Deteriorating conditions could put pressure on #UAE banks | ZAWYA MENA Edition

S&P: Deteriorating conditions could put pressure on UAE banks | ZAWYA MENA Edition:

S&P Global Ratings has revised its outlooks for five UAE banks from stable to negative, citing a deteriorating operating environment.

The ratings agency, which reviewed First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB), Mashreqbank, Sharjah Islamic Bank (SIB) and National Bank of Fujairah (NBF), warned that the weakening conditions could put pressure on banks’ profitability.

In its latest analysis, S&P expects that in 2020, the sharp drop in oil prices as well as reduced economic activity due to the coronavirus, will exert significant pressure on the UAE economy, especially the real estate, trade, retail, transportation and hospitality sectors.

“We expect loan quality will be tested and cost of risk will increase, weighing on banks' profitability in the next 12 to 24 months. In 2019, banks' asset quality indicators had already started to show signs of weakness,” S&P said in a note.