La banca en Abu Dhabi no es la de Dubai

The outlook for the banking system of the UAE remains negative with Dubai-based banks in particular facing asset quality challenges, said Moody’s in a new report.

The rating agency said another key driver of the outlook would be low provisioning coverage levels while the performance gap between Dubai and Abu Dhabi banks was likely to grow.

"Abu Dhabi benefits from higher public-sector spending, while Dubai’s prospects will remain overshadowed by real-estate oversupply and the legacy GRI asset-quality challenges, despite its more diversified private sector, which has shown solid signs of recovery," it said.

Despite Moody’s projections of modest overall credit growth of 4-7 percent for 2012 and 2013 real GDP growth in the 2-3 percent range for 2012 and 2013, it said asset quality will remain poor with the ratio of problem loans to gross loans in the 10-12 percent range for 2012, and then declining marginally in 2013.

"Moody’s view is mainly driven by the persistently high level of exposures to large stressed GRIs and other legacy exposures, despite the recovery in core sectors, which, with commercial real estate, continue to contribute the bulk of the problem loans," its report said.

Moody’s said it expects associated provisioning needs and low lending confidence to continue to subdue bank profitability.

"These trends will continue to suppress banks’ net profits for 2012 and into 2013, with the ratio of net income to average risk-weighted assets at around 2 percent," the report said.

Visto en: arabianbusiness