ID :
102680
Tue, 01/26/2010 - 14:54
Auther :
Shortlink :
https://oananews.org//node/102680
The shortlink copeid
Assets of UAE banks declined in December
Dubai, Jan 26, 2010 (WAM)- Bank assets, deposits and loans recorded the sharpest drops of 2009 in December as the sector continued to battle non-performing loans and low deposit rates, UAE Central Bank statistics released yesterday showed.
For the 52 banks subject to the Central Bank's regulation, assets fell by more than Dh32 billion to Dh1.51 trillion after recording a steady increase each month since January 2009. Deposits and loans recorded some drops during the year, but none as significant as in December.
Analysts said the numbers are interconnected, reflecting the general decline in macro-economic sentiment.
"Total assets fell partly due to a drop in net loans," Janany Vamadeva, banking analyst at HC Securities in Dubai, told ‘Gulf News’ yesterday. "This may be due to the increase in provisioning as seen — net loans are gross loans minus provisioning — and restricted lending in personal segment to maintain asset quality. Another reason is a fall in investments as well."
The Central Bank is close to setting new provision guidelines requiring banks to categorise all loans 90 days past due date as non-performing, down from the previous limit of 180 days. Bankers say the new regulation will have little effect as many banks have implemented the changes voluntarily.
Deposits declined at a higher rate than loans which translated into the loans-to-deposits ratio growing 1 per cent to 103.5 per cent.
"Considering economic activity has not rebounded, it's not surprising to see banks unwilling to lend at previous rates," Delphine Arrighi, Standard Chartered senior rates strategist for the Middle East and North Africa, told ‘Gulf News’.
"Right now it's not a lack of liquidity but confidence for banks to start lending again."
For the 52 banks subject to the Central Bank's regulation, assets fell by more than Dh32 billion to Dh1.51 trillion after recording a steady increase each month since January 2009. Deposits and loans recorded some drops during the year, but none as significant as in December.
Analysts said the numbers are interconnected, reflecting the general decline in macro-economic sentiment.
"Total assets fell partly due to a drop in net loans," Janany Vamadeva, banking analyst at HC Securities in Dubai, told ‘Gulf News’ yesterday. "This may be due to the increase in provisioning as seen — net loans are gross loans minus provisioning — and restricted lending in personal segment to maintain asset quality. Another reason is a fall in investments as well."
The Central Bank is close to setting new provision guidelines requiring banks to categorise all loans 90 days past due date as non-performing, down from the previous limit of 180 days. Bankers say the new regulation will have little effect as many banks have implemented the changes voluntarily.
Deposits declined at a higher rate than loans which translated into the loans-to-deposits ratio growing 1 per cent to 103.5 per cent.
"Considering economic activity has not rebounded, it's not surprising to see banks unwilling to lend at previous rates," Delphine Arrighi, Standard Chartered senior rates strategist for the Middle East and North Africa, told ‘Gulf News’.
"Right now it's not a lack of liquidity but confidence for banks to start lending again."
