Impact of lower UAE growth has already started to feed through into the earnings of some banks
Union National Bank (UNB) doesn't expect to see much growth in profits or lending in 2016, its chief executive has said, but the Abu Dhabi-based bank could tap the bond market this year to raise funds.
The UAE’s economy minister said last week the country would find it difficult to grow its economy by more than 3 percent this year and officials have estimated 2015 growth to be between 3 and 3.5 percent.
The impact of lower growth has already started to feed through into the earnings of some UAE banks.
In a mixed fourth-quarter reporting period, UNB was one of the worst performers with a 55 percent profit slump compared with the year before.
"I think it would be challenging to see a higher growth rate in 2016," Mohammad Nasr Abdeen told reporters on the sidelines of the bank's annual shareholders' meeting.
Having seen provisioning levels jump by 44 percent year on year in the fourth quarter, and by 59 percent on an annual basis, Abdeen said he expected the amount of cash set aside for bad loans in 2016 to be equal to last year or lower.
Any big jump in loan growth was also unlikely, Abdeen said. The bank had posted a 7 percent increase in 2015.
UNB could tap the bond market in 2016 to help supplement its deposit levels, which are expected to remain stable, according to Abdeen, noting most of its $3 billion bond programme remained unused.
Gulf banks have rushed to raise money in recent months in a flurry of activity attributed to a liquidity squeeze caused by lower oil prices, although recent volatility in the bond market has hampered debt issuance despite banks meeting with investors to sound out possible transactions.