Moody’s Investors Service revised the outlook for UAE banks to positive from stable amid the country’s strong economic growth due to its diversification efforts.
The UAE’s real gross domestic product is expected to expand by 4.6 per cent in 2024, from 3.1 per cent in 2023, and the non-oil economy will grow by an estimated 4.5 per cent this year, supporting banks' performance, the rating agency said in a report on Wednesday.
“Continued economic growth will support borrowers' repayment capacity … banks' strong capital buffers will inch higher on the back of bottom-line profitability that will remain broadly stable,” Moody’s said.
The Emirates' economy rebounded strongly from the slowdown caused by Covid-19, growing by 7.9 per cent in 2022, the most in 11 years, to Dh1.62 trillion ($441 billion) at constant prices. It has maintained a robust growth momentum since.
The UAE economy is expected to grow by 5 per cent this year, driven by a robust expansion in the country's non-oil sector and increase in foreign direct investment, Minister of Economy Abdulla bin Touq told state news agency Wam last month.
The non-oil economy currently accounts for 73 per cent of the UAE’s GDP, which is a “historic first for the country”, he said.
Loan performance of banks will remain broadly stable, Moody’s said.
Problem loans will remain steady at around 4 per cent to 5 per cent as a proportion of total loans, as economic growth improves borrowers' repayment capacity and sustains “a still-sound mid-single-digit credit expansion”, it added.
Deposit growth will remain higher than credit demand, underpinning stable funding conditions.
UAE lenders' profitability is also projected to be stable as interest rates remain high and are not forecast to be cut before the second half of the year, according to Moody’s.
The UAE government is also expected to step in to support the country’s lenders in times of stress.
“We expect the UAE government's willingness and capacity to support UAE banks to remain very high, underpinned by local banks' dominance in the domestic financial system, the banking system's concentrated structure and the heavy footprint of the UAE government in most banks' balance sheets.”
Badis Shubailat, AVP-analyst at Moody's, said the change in outlook to positive for the UAE banking system comes as “Moody's projects real non-oil GDP will grow at a still robust 4.5 per cent in 2024, helped by high business confidence and structural reforms designed to increase the population and attract foreign investments”.
“Still, as elsewhere in the GCC region, an escalation of geopolitical tensions remains a risk,” he said.
The outlook for Saudi Arabia’s banking sector also remains positive amid the economic diversification agenda, Moody's said.
The demand for credit for government-backed projects is expected to improve loan performance and generate strong profit for banks in the Arab world's largest economy.
Saudi Arabia is investing heavily in its non-oil economy as part of its Vision 2030 strategy to diversify away from oil.
It is building a number of mega projects, including the $500 billion futuristic city Neom as well as Qiddiya, a huge entertainment and sports project in Riyadh, to support its ambitions.
The outlook for banks in other GCC countries including Bahrain, Kuwait, Oman and Qatar remains stable, according to the agency.
“Our banking outlooks across the Gulf Cooperation Council region reflect continued growth in the non-oil economy and supportive operating conditions,” said Nitish Bhojnagarwala, senior vice president andmanager at Moody’s.
EPL's youngest
- Ethan Nwaneri (Arsenal)
15 years, 181 days old
- Max Dowman (Arsenal)
15 years, 235 days old
- Jeremy Monga (Leicester)
15 years, 271 days old
- Harvey Elliott (Fulham)
16 years, 30 days old
- Matthew Briggs (Fulham)
16 years, 68 days old
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
HOW TO WATCH
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Top New Zealand cop on policing the virtual world
New Zealand police began closer scrutiny of social media and online communities after the attacks on two mosques in March, the country's top officer said.
The killing of 51 people in Christchurch and wounding of more than 40 others shocked the world. Brenton Tarrant, a suspected white supremacist, was accused of the killings. His trial is ongoing and he denies the charges.
Mike Bush, commissioner of New Zealand Police, said officers looked closely at how they monitored social media in the wake of the tragedy to see if lessons could be learned.
“We decided that it was fit for purpose but we need to deepen it in terms of community relationships, extending them not only with the traditional community but the virtual one as well," he told The National.
"We want to get ahead of attacks like we suffered in New Zealand so we have to challenge ourselves to be better."
SERIES SCHEDULE
First Test, Galle International Stadium
July 26-30
Second Test, Sinhalese Sports Club Ground
August 3-7
Third Test, Pallekele International Cricket Stadium
August 12-16
First ODI, Rangiri Dambulla International Stadium
August 20
Second ODI, Pallekele International Cricket Stadium
August 24
Third ODI, Pallekele International Cricket Stadium
August 27
Fourth ODI, R Premadasa Stadium
August 31
Fifth ODI, R Premadasa Stadium
September 3
T20, R Premadasa Stadium
September 6
Types of policy
Term life insurance: this is the cheapest and most-popular form of life cover. You pay a regular monthly premium for a pre-agreed period, typically anything between five and 25 years, or possibly longer. If you die within that time, the policy will pay a cash lump sum, which is typically tax-free even outside the UAE. If you die after the policy ends, you do not get anything in return. There is no cash-in value at any time. Once you stop paying premiums, cover stops.
Whole-of-life insurance: as its name suggests, this type of life cover is designed to run for the rest of your life. You pay regular monthly premiums and in return, get a guaranteed cash lump sum whenever you die. As a result, premiums are typically much higher than one term life insurance, although they do not usually increase with age. In some cases, you have to keep up premiums for as long as you live, although there may be a cut-off period, say, at age 80 but it can go as high as 95. There are penalties if you don’t last the course and you may get a lot less than you paid in.
Critical illness cover: this pays a cash lump sum if you suffer from a serious illness such as cancer, heart disease or stroke. Some policies cover as many as 50 different illnesses, although cancer triggers by far the most claims. The payout is designed to cover major financial responsibilities such as a mortgage or children’s education fees if you fall ill and are unable to work. It is cost effective to combine it with life insurance, with the policy paying out once if you either die or suffer a serious illness.
Income protection: this pays a replacement income if you fall ill and are unable to continue working. On the best policies, this will continue either until you recover, or reach retirement age. Unlike critical illness cover, policies will typically pay out for stress and musculoskeletal problems such as back trouble.
Origin
Dan Brown
Doubleday
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The specs: 2019 Aston Martin DBS Superleggera
Price, base: Dh1.2 million
Engine: 5.2-litre twin-turbo V12
Transmission: Eight-speed automatic
Power: 725hp @ 6,500pm
Torque: 900Nm @ 1,800rpm
Fuel economy, combined: 12.3L / 100km (estimate)
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The chef's advice
Troy Payne, head chef at Abu Dhabi’s newest healthy eatery Sanderson’s in Al Seef Resort & Spa, says singles need to change their mindset about how they approach the supermarket.
“They feel like they can’t buy one cucumber,” he says. “But I can walk into a shop – I feed two people at home – and I’ll walk into a shop and I buy one cucumber, I’ll buy one onion.”
Mr Payne asks for the sticker to be placed directly on each item, rather than face the temptation of filling one of the two-kilogram capacity plastic bags on offer.
The chef also advises singletons not get too hung up on “organic”, particularly high-priced varieties that have been flown in from far-flung locales. Local produce is often grown sustainably, and far cheaper, he says.
What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
UAE currency: the story behind the money in your pockets
Mohammed bin Zayed Majlis
MATCH INFO
BRIGHTON 0
MANCHESTER UNITED 3
McTominay 44'
Mata 73'
Pogba 80'
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
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