25.9 C
Tunisia
Friday 24 September 2021
HomeWorldUAE may expand credit to keep recovery on track

UAE may expand credit to keep recovery on track

 The UAE may take steps to boost bank credit as a slowdown in lending and a surge in interest rates threaten to stall a recovery from the global crisis, economists said.

“It seems likely that there could be further government measures,” said Monica Malik, Dubai-based economist at EFG-Hermes Holding. “The most effective way to lower the interbank rate would be to increase government deposits in the banking system to boost liquidity.”

The UAE’s three-month interbank offered rate or Eibor rose to a six-month high of 2.20875 per cent last week, reflecting a shortage of deposits and banks’ unwillingness to lend.

The UAE government has guaranteed all local bank deposits and interbank loans, created a Dh50-billion credit facility and said it would pump Dh70 billion into banks. Another emergency facility offered after the Dubai World debt announcement hasn’t been used by banks, Saif Shamsi, senior executive director for treasury at the UAE Central Bank, said on February 15.
The central bank also cut its benchmark repurchase rate to 1 per cent and is discussing a proposal to guarantee bonds issued by UAE-based lenders.

Marios Maratheftis, economist at Standard Chartered, noted in a monthly economic report: “While lending activity remains muted and economic forecasts for the UAE are relatively weak, we do not rule out further intervention from the central bank to push rates lower.”

The central bank didn’t immediately respond to an e-mail on February 25 requesting comment.

Dividend approved

First Gulf Bank’s annual general meeting Sunday approved the distribution of a 50-per cent cash dividend to shareholders. The meeting also approved the company’s 2009 financial results with net profit put at Dh3.31 billion.

“Our equity at Dh23 billion with a capital adequacy ratio of 22.6 per cent is large and increases our risk-bearing capacity apart from preparing us for new growth. Our financial ratios are amongst the best in the banking industry and we take pride in having built enough provisioning and liquidity on our balance sheet,” Shaikh Hazza Bin Zayed Al Nahyan, chairman of First Gulf Bank, said in a statement Sunday

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

MOST POPULAR

HOT NEWS