Wednesday January 16, 2019
Cracks are starting to show in the United Arab Emirates’ banking sector as a property and retail slump take its toll on lenders.One of the country’s smallest banks is being bailed out, problem loans are expected to rise this year and lenders are exploring mergers to stay competitive. Slow property sales, higher interest rates and a rise in lending amid improved economic growth could mean provisions jump as much as a quarter, according to analysts.“We don’t expect a meaningful pickup in economic growth this year so we wouldn’t be surprised to see a deterioration in credit quality due to the SME and commercial segments,” said Shabbir Malik, a Dubai-based analyst at EFG-Hermes Holding SAE. “Recoveries from legacy loans, especially at Dubai banks, were high last year and these are likely to fade this year.”