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Slow Credit Growth Challenges UAE Bank Profits

Slow Credit Growth Challenges UAE Bank Profits
Slow Credit Growth Challenges UAE Bank Profits

Muted private sector credit growth is expected to remain a big challenge for banking sector profitability. Credit growth in the UAE strengthened to 0.5% month on month in February, the fastest pace since September 2016, according to the monthly data from the Central Bank of UAE, Arabian Business reported. The stronger monthly credit growth in February was largely driven by the government related entities segment, which was up 1.9% compared to January following two consecutive months of contraction. Despite the month-on-month growth, annual loan growth decelerated further to 5.4% on year last month, reflecting the overall soft pace of credit expansion since the fourth quarter of 2016. Union National Bank reported a relatively strong 8% year on year growth in loans and advances, while the average credit growth for the sector is expected to be in the range of 5 to 7% this year.

 

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