UAE’s banking system considered resilient

by Richard Kilner

Story link: UAE’s banking system considered resilient

The United Arab Emirates’ banking system would withstand any severe external credit difficulties relatively well, according to the Dubai Chamber of Commerce and Industry.

The Chamber also said that the UAE’s banks would be able to cope with a downturn in the real estate market, as they possess substantial overseas assets and are thus well placed to resist any sudden liquidity problems.

Comparing a like for like period the Chamber revealed that the UAE’s banks saw return on equity shift upwards from 14% to 18%.

In addition, the non-performing loans ratio fell from 14% in 2003 to just 6% in 2006.

The ratio of interest income to gross income also fell, down from 59% in 2003 to just 29% in 2006, meaning that the UAE’s banks are becoming less dependent upon interest margins for profits.

The positive outlook from the Dubai Chamber of Commerce and Industry follows a similarly upbeat report from the IMF.