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29 March 2024

UAE bank provisions for bad loans up Dh10bn

UAE bank provisions for bad loans up Dh10bn. (FILE)

Published
By Vicky Kapur

UAE banks saw their year-on-year provisions for non-performing loans (NPLs) grow to a record Dh37.8 billion in September 2010, up Dh10bn or 36 per cent, over the same month last year, Central Bank data shows.

General provisions, on the other hand, were up almost 60 per cent to Dh14.2bn in September from Dh8.9bn a year ago.

Total provisioning undertaken by banks, including provisioning for NPLs as well as general provisioning, has reached a record Dh52bn now, an increase of Dh8.7bn, or over 20 per cent, in nine months.

Provisions for NPLs, which were at Dh19.7bn in December 2008, rose to the current levels due to the impact of the ongoing global economic turmoil on the local real estate and banking sector, leading local banks to make huge provisions for defaults.

Banks in the country have been consistently raising their provisioning levels over the past 18 months in accordance with the Central Bank’s instructions.

The banks’ capital adequacy ratio, however, has strengthened at a rapid clip and now stands at 20.4 per cent compared with 18 per cent a year ago, official data showed.

According to an International Monetary Fund report on Sunday, UAE banks’ capital adequacy level is the best among its GCC peers.