Dubai – Mubasher: The UAE banking system has adjusted to the decrease in oil prices, which will enable it to back the nation's growth rate this year.

Credit is still declining, recording a rise of 0.5% year-on-year in 2018, down from 11% year-on-year increase in mid-2015, according to the National Bank of Kuwait’s (NBK) report posted on Tuesday.

A group of factors can explain that slowdown, which is considered the worst in the GCC, including the drop in oil prices during 2014 that affected non-oil economic growth and propelled UAE-based banks to resort to rigid credit criteria.

Based on December 2017’s figures, bank lending was stagnated in a range of sectors, among them the finance, personal, and trade sectors, the Kuwait-based lender remarked.

On the other hand, deposits rose 7% in 2017 up from 2% in 2015, NBK said, ascribing this growth to the government's deposits.

These deposits levelled up on the recent improvement in oil prices and two sovereign debt issues conducted by the Emirate of Abu Dhabi, the report noted.

“Although there are pressures in both directions and a major upswing looks unlikely, monetary trends could improve through 2018. One factor is that sentiment seems to be improving,” the NBK commented.