United Arab Emirates dirham banknotes in closeup.

 

After a year of stellar growth in 2014, the UAE’s banking sector will have to brace up for a tougher 2015. According to Standard & Poor’s Ratings Services, banks in the country will be faced with a triple whammy of slowing credit and deposit growth, as well as deterioration in asset quality, which in turn will negatively impact earnings that are expected to go down to single digits this year. The fall in oil prices, coupled with the volatility on the emirates’ equity markets and a correction in the residential real estate market after two years of sharp price appreciation, are all expected to weigh on the banking sector’s performance this year. 2015 will be “visibly” different from last year and in many ways marks a “reversal in the trend that saw UAE banks make a continued recovery after the crisis of 2009” said Timucin Engin, Primary Credit Analyst at S&P Dubai, at a media roundtable. For 2015, the ratings agency expects credit growth to halve to roughly seven to eight percent, when compared with an estimate of 15 percent for full-year 2014 for the rated banks. Deposit growth will also be “noticeably weaker” both in 2015 and 2016 due to a drop in government and public sector deposits. – See more at: http://trendsmena.com/economy/uae-banks-brace-rough-2015#sthash.DBvYauCe.dpuf

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