Abu Dhabi: UAE banks are in healthy strong positions with many positive financial indicators that reflect their very good performance and clients’ confidence in spite of the very political chaos in the region which disseminated many countries, affecting their economies badly.

“The Banking and financial institutions are insulated from the current turmoil in financial markets and political chaos in the region,” said the UAE Central Bank in a statement following its board’s 7th meeting for the year 2012 in Abu Dhabi.

“Based on positive financial indicators, the board had reviewed a report on the monetary and fiscal policies of the UAE and its financial stability,” said the Central Bank.

According to the Central Bank, the report showed the overall prudential ratios of the banking system, financial stability, the Central Bank data and liquidity.

The members also discussed some banking policies issues and reviewed draft of the regulations real estate loans and they also touched upon discussed basic figures, along with an assessment of the financial and regulatory status of each of the banks operating in the UAE.

Dr Waddah Taha, a chief economist and financial analyst told Gulf News that UAE banks have become the strongest financial institutions in the MENA in terms of capital adequacy.

“Banks in the UAE are well capitalized and profitable,” said Dr Taha, adding that “their balance sheets have been strengthened recently due to the strong economic performance and high government participation in financial institutions.”

As per regulations, he said that tangible and remarkable improvements have been made in regulatory and supervisory fields.

“Capital adequacy of banks in the UAE recorded around 21 per cent by end of 2011 and it is expected to increase further this year,” said Dr. Taha.

A UAE economist who preferred to be anonymous told Gulf News: “Such meetings by the board are ordinary ones. As we are coming close to the end of 2012, the members must have discussed overexposure to real estate and property sectors and extremely leveraged firms had corroded quality assets in the UAE.”

“In the UAE, exposure to government-related entities (GREs) is more than 30 per cent of capital,” warned the economist.

“The UAE banks also have the highest non-performing loans (NPLs) to total credit, which stood at eight per cent by end of 2011,” he explained.

Dr Taha warned that there have to be prudential regulations, adding that the private sector loan growth in the UAE has been controlled since 2008 as banks remain prudential as they fear deterioration in asset quality.