By Elsa Baxter
Central Bank figures reveal mortgages up by AED12bn, compared to AED44bn in 2008.
UAE bank mortgage lending slowed during the first half of this year after property prices plummeted amid the global financial crisis, official figures show.
Central Bank figures on Sunday revealed that mortgages provided by the country’s 52 national and foreign banks rose by AED12bn from January to June, compared to AED44bn for the same period in 2008.
According to a report in Emirates Business, the total amount of UAE mortgages last year amounted to nearly AED69bn.
Analysts told the paper the slowdown in mortgage loans was due to a more cautious lending policy by the banks in light of the global financial crisis and exposure to the troubled Saudi firms Saad Group and Ahmad Hamad Algosaibi & Bros Co.
Dubai’s house prices have fallen 50 percent from their peaks of 2008, and are likely to fall further following the emirate’s announcement that it would delay debt payment issued by Dubai World and Nakheel.
Ziad Dabbas, financial analyst at the government-controlled National Bank of Abu Dhabi, told the paper that UAE banks had stepped up their loan loss provisioning and had sufficient reserves against Saad and Algosaibi exposure.
But, he said this could affect their general performance. "Their net profits could be higher… but you have to take into consideration another issue which could prompt them to embark on a fresh wave of provisioning, which is a possible default problem in the real estate sector," he told the paper.
UAE banks have already seen their net earnings reduced in the first nine months of this year because of a surge in provisioning, which bankers expect to further swell, the paper said.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.