By: Mahmoud Gamal
Abu Dhabi – Mubasher: Most of the banks listed on the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) have succeeded in cutting their provisions of non-performing loans (NPLs) by 21.07% during the first nine months of 2018, as compared with the same period last year.
NPL provisions at 18 listed-lenders fell to AED 8.52 billion in the nine-month period ended September, compared to AED 10.8 billion in the prior-year period, according to Mubasher statistics.
Around 11 Abu Dhabi-listed banks achieved AED 5.2 billion in NPL provisions, while seven Dubai-listed banks generated AED 3.32 billion, statistics showed.
The decline in banks’ provisions is an indicator of lower bad loans amid the continued economic growth despite the pressures of the new Basel III standards, analysts told Mubasher.
The UAE banks are paving the way for implementing the banking standards of Basel III, which will be introduced by the Central Bank of the UAE in 2019.
Success
Most of the UAE lenders reported solid financial results for the nine-month period of the year on the back of declining NPL provisions, in line with the success of most banks in restructuring and scheduling their bad loans, CEO of Minecraft Consulting Fady Al-Ghattis told Mubasher.
Al-Ghattis projected banks to maintain cutting NPL provisions amid expectations of growing economy that coincides with stable oil prices.
Some of the small-sized banks may face obstacles and mergers in the coming period in light of impacted liquidity due to the increase in the US interest rates, he indicated.
Implementing Basel III standards to boost liquidity will push the banks to raise capital, issue bonds or sukuk, and incline to mergers in a bid to face the strict requirement regarding liquidity, he noted.
IFRS 9
For his part, senior financial analyst at Menacorp Financial Services Issam Kassabieh said that the UAE banks were able to enhance their financial stability and boost the quality of their assets during the nine-month period of this year.
The banks have to implement the International Financial Reporting Standard 9 (IFRS 9), instead of IAS 39, he added.
Translated by: Mai Ezz El-Din
