Banks to iron out key ratio by Q3

UAE banks will iron out the distortion in their loans-to-deposits (LTD) ratio in the second half of this year, analysts told Emirates Business.

A new drive to attract deposits is expected to sort out the skewed ratio created by a loan push in 2007 and early 2008. Banks are going all out to woo depositors by offering attractive interest rates and schemes.

As banks went on a lending spree in the boom period, the LTD hit an average of 105 for UAE banks, with some banks reaching an alarming level of 120. The volume of loans far outstripped deposits as lenders expanded balance sheets exponentially.

Promotional offers rewarding customers who open deposit accounts have flooded the market. The new liquidity this brings will place UAE banks in a stronger position before year-end.