04 January 2012
The UAE banking sector has been profitable despite its weak asset quality and increasing loan to deposit ratio. While the property market is shaping up and retail loan books are improving, bad debts from government related holdings still seem to be a cause of concern in the coming months. At the same time, increase in non-performing loans (NPL) might affect profitability in the future.
A poor response to the Emirates debt market twice in two years shows very little investor confidence in the banking industry. However, Frost & Sullivan expects improvement in asset quality, slow loan growth, industry consolidation, focus on client satisfaction and quality of service to be the drivers for profitability in 2012.
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The UAE banking sector has been profitable despite its weak asset quality and increasing loan to deposit ratio. While the property market is shaping up and retail loan books are improving, bad debts from government related holdings still seem to be a cause of concern in the coming months. At the same time, increase in non-performing loans (NPL) might affect profitability in the future.
A poor response to the Emirates debt market twice in two years shows very little investor confidence in the banking industry. However, Frost & Sullivan expects improvement in asset quality, slow loan growth, industry consolidation, focus on client satisfaction and quality of service to be the drivers for profitability in 2012.
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Perspective by: Business and Financial Services Analyst, Frost & Sullivan
© Press Release 2012
