ABU DHABI, (Pakistan Point News - 24th Oct, 2021) The health of the banking system in a country is a key indicator of its overall economic outlook, a local English-language daily commented.
In an editorial on Sunday, Gulf news said, "The resilience of the UAE’s banking sector during the pandemic and the steady recovery in key performance metrics during the past 18 months in areas such as asset quality, liquidity, loans and deposit growth, profitability, loans to deposit ratio, costs and capitalisation point to the healthy fundamentals of the sector backed by a sustainable operating environment.
Last week, Emirates NBD reported a net profit of AED7.3 billion for the nine months of 2021, up 29 percent year on year. A similar trend was also seen in the financials of Emirates Islamic, with a 358 percent growth in nine-month profits and Sharjah Islamic Bank reporting a 30 percent increase, the daily added.
"There are clear signs of risk appetite and optimism gaining traction with some of the high-frequency economic indicators such as retail sales, real estate transactions, hiring by the non-oil private sector, rising demand for travel, tourism and leisure activities showing gains in recent months.
"The latest UAE Purchasing Managers’ Index (PMI) data show a robust improvement in business conditions. While the private sector activities are on the rise with a marked increase in demand from all key sectors, Expo 2020 is working as a catalyst in economic recovery and sentiment elevator."
The paper stated that there has been a steady decline in loan loss provisions over the past four quarters, thanks to the huge advance provisions the banks booked in the early days of the pandemic, the liquidity support the banks received from the Central Bank of UAE (CBUAE) and the improving economy.
The Dubai-based concluded by saying, "While the CBUAE is set for a gradual withdrawal of its direct liquidity support and regulatory forbearance measures, a healthy economy and a robust banking system will undoubtedly remain mutually supportive to the economic growth momentum."