Global Arab Network | UAE banking sector on recovery track

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UAE banking sector on recovery track

Global Arab Network - - Mohammed Almasri

Tuesday, 06 September 2011 14:32

http://www.english.globalarabnetwork.com/images/stories/2011/Feb/Bloomberg_Dubai_International_Finance_Centre__UAE.jpg

Global Arab Network - The UAE banking sector will continue to steadily recover into the next year, reveals a latest forecast.

According to a Business Monitor International (BMI) report on commercial banking in the UAE, the business environment and infrastructure is very favourable and regulators are well regarded.

“Lending to the government, a segment that has largely been closed to the foreign banks, has been exploding. It should continue to grow, if at a more measured pace. At some stage, the privatisation of former state-owned enterprises should resume. This should provide opportunities for both commercial banks and investment banking affiliates”, it said as reported in 'Khaleej Times'.

Considering the latest central bank data and Q1 statements, the report said the UAE’s banking sector continues to trudge along on its slow road to recovery. “The most noticeable development in the industry over the past three months has been the marked improvement in underlying liquidity conditions, which has been driven in large measure by a fundamental reappraisal of risk sentiment that has solidified the economy’s reputation as a ‘safe haven’ in a volatile region,” the report said.

In the first four months of the year, the total stock of loans in the economy increased by only 3.2 per cent y-o-y, well below rates of credit growth seen in Saudi Arabia or Qatar.

Similarly, outlook on banking sectors throughout the Middle East and North Africa has broadly improved since our last quarterly update, although we stress that in many cases, a degree of caution is still warranted,” BMI said.

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