UAE banks will see credit climb by seven per cent this year, according to Standard & Poor’s Global Ratings.
The credit rating agency expects that the banks of the United Arab Emirates will achieve strong performance in 2023.
In a recent report, Standard & Poor said that UAE banks will benefit from strong non-oil GDP growth, which will mitigate the impact of rising interest rates on credit growth.
UAE banking forecast
The report expects bank credit growth at UAE banks to rise to about 7 per cent in 2023, from 5 per cent in 2022.
The report stated that the performance of UAE banks improved in the first half of this year due to the rise in interest rates, with high interest rates expected to continue to support banks’ profitability.
The report believes that the non-oil economy in the United Arab Emirates is still providing sufficient support to help reduce the increase in loans that are classified as “non-productive.”
In addition, banks’ reserve allocations over the past two years will help them withstand challenges.
According to the report, bank financing will continue to benefit from their strong success in collecting deposits.
Banks have collected local deposits over the past 18 months.
Overall, Standard & Poor’s expects an improvement in bank returns in the Gulf Cooperation Council (GCC) countries in 2023, due to higher profit margins and continued lending growth.
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