Property Loans May Double UAE Banks’ Bad Debt
According to the Washington-based Institute of International Finance data that high risk in the loan banks about 10 percent in the asset quality of UAE banks. For period 2008 – 2009 that total of loans get double in Kuwait and UAE. It must be expected that by increase further this year on 2010. In 2008 the ratio gets 2.5 percent, in 2009 be 4.8 percent and forecast in last year that 8.2 percent. In the next year maybe about 10 percent, compare with 25 percent of the outstanding loan where installments are due for 90 or more days, 50 percent provisioning if installments are due for 120 or more days and 100 percent provisioning if installments are due for 180 or more days.
The profitability was look good in 2009 and the first half of 2010, it was happen when two Saudi family-affiliated conglomerates and some of deterioration in corporate loan portfolios, defaults in personal loan and credit card portfolios. Every banking system in the region although variations among individual banks are at times significant when average capital adequacy ratio was above 15 percent. May it so incredible number of high risk moment in the several time for bank and government economic financial market.