{"id":88883,"date":"2024-02-09T00:00:00","date_gmt":"2024-02-09T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/stable-outlook-for-uae-banks-in-2024\/"},"modified":"2024-02-09T00:00:00","modified_gmt":"2024-02-09T00:00:00","slug":"stable-outlook-for-uae-banks-in-2024","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2024\/02\/09\/stable-outlook-for-uae-banks-in-2024\/","title":{"rendered":"Stable outlook for UAE banks in 2024"},"content":{"rendered":"

Less lending + slightly slower bottom line growth for banks in 2024: <\/strong>Lending in the UAE is expected to ease well into 1H 2024 on the back of increased interest rates and a marginal slowdown in non-oil sector activity, S&P Global says in its Credit FAQ<\/a>. S&P expects credit growth rates for UAE banks to be lower than the 7% rate recorded in 2023, but the outlook remains stable, with a continued expansion of the hospitality, real estate, and financial services sectors.<\/p>\n

Stellar bank earnings are expected to slow down:<\/strong> Banks are expected to see their bottom lines narrow as the US Federal Reserve ends its monetary tightening cycle and begins to cut interest rates, leading to lower interest rate margins, S&P Global predicts. <\/p>\n

ICYMI- Emirati banks have witnessed a substantial surge in earnings in 2023<\/strong>, fueled by minimal loan loss provisions, augmented interest margins, and high deposit rates that outperformed lending. GCC banks on the whole are expected to experience slightly slower credit growth this year, moderating due to an unfavorable base effect and heightened lending caution, S&P Global said previously<\/a>.<\/p>\n

On the upside, banks\u2019 strong capital buffers are expected to persist well into 2024<\/strong>, as banks continue to support themselves with internal capital generation, potentially bolstered by hybrid capital instruments that employ debt and equity, S&P said. This will allow banks to replace their instruments more affordably when interest rates fall. <\/p>\n

There are risks: <\/strong>If interest rates remain elevated for longer, corporate credit quality could eventually impact demand for new credit, the ratings agency said. An escalation of ongoing regional conflicts like the war in Gaza and Red Sea tensions could also pose a risk to banks, especially those with exposure to Egypt, it added. <\/p>\n

But UAE banks are strong enough to absorb the shocks, according to the agency: <\/strong>S&P\u2019s base case scenario foresees no shocks beyond the banks' absorptive capacity, noting that the banking system is \u201cin a very strong net asset position and able to withstand our stressed outflow scenario.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"

The banking system in the UAE will be able to absorb regional shocks<\/p>\n","protected":false},"author":1,"featured_media":88884,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1618],"tags":[159,19,7,17],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-88883","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banking","tag-economy","tag-enterpriseam-uae","tag-sp-global","wpautop","entry"],"acf":{"mongo_id":"ff3afa82-ea70-4a6e-8a7e-94814757d3a2","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/2\/747.jpg","photo_position":"above","homepage_title":"","full_issue_title":"2024 could see slower growth for banks, but the outlook is stable -S&P Global","related_issue":[88874],"teaser":"The banking system in the UAE will be able to absorb regional shocks","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2024\/2\/.a77dcfe0-f1ab-493a-8b96-0a99d411ba65.mp3"},"yoast_head":"\nStable outlook for UAE banks in 2024 - 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