Loan growth in UAE expected to exceed 8%

Dubai: Loan growth in the UAE is expected to surpass 8 per cent next year while the average loan growth across the region will be in the range of 8 to 10 per cent, said Adnan Ahmad Yousuf, chairman of the Union of Arab Banks (UAB) Wednesday.

Speaking to reporters on the sidelines of a conference on the media's impact on the Arab banking and financial sector, Yousuf said the UAE banking sector has mostly overcome the impact of the financial crisis and the burden of impaired loans on their balance sheets will start declining from the first quarter of next year. "I expect the UAE banks to clean their balance sheets next year and the loan growth to pick up momentum," he said.

Data

Overall loan growth across the banking sector in the UAE was 0.8 per cent in the first half of this year compared to an average growth of 1.5 per cent in the first half of 2009 and 24 per cent in the same period in 2008. Analysts and bankers expect loan growth to remain low this year as banks focus more on balance sheet repair.

Ahmad Humaid Al Tayer, Governor of the Dubai International Financial Centre and Chairman of the UAE Banks Association, said yesterday that the UAE banking sector is adequately capitalised and has sufficient liquidity. "The sector does not need further liquidity or capital support. Banks have already started expanding loan books," he said.

Credit rating agencies Moody's, Fitch and Standard & Poor's consider the liquidity position of UAE banks to be satisfactory. In 2009, UAE banks managed their liquidity by curtailing loan growth, and they are continuing this approach in 2010.