DUBAI // With the ratio of non-performing loans to total loans almost doubling in the first nine months of last year for the 30 Gulf-based banks rated by Standard & Poor's, it is no wonder the ratings agency has a negative outlook for one third of them.
In a research note released on Monday, S&P said there was a marked increase in this ratio; on average, non-performing loans were 5.4 per cent of total loans, up from 2.7 per cent at the close of 2008.
Accounting for most of this increase, S&P said, were banks in Dubai and Kuwait. Also contributing were some of the rated institutions from around the Gulf with exposure to the Saudi concerns Ahmad Hamad Al Gosaibi and Brothers and the Saad Group.
Asset quality indicators are also on the decline. In its report, S&P said the provisions made to cover non-performing loans now stood at 86.8 per cent of the total value of non-performing loans, from 151.3 per cent during the first nine months of last year.
"We expect asset quality indicators to further deteriorate in the next few quarters as the economic slowdown continues to take its toll on the corporate and retail sectors," said Mohamed Damak, an S&P credit analyst.
Dubai World debt payment negotiations are playing a big role. In its weekly credit watch, released on Monday, Moody's Investors Service estimated that UAE banks could lose 9 per cent of the capitalisation they had at the end of last year if Dubai World repaid its debts at only 60 cents on the dollar. Moody's indicated that rated UAE banks had an overall exposure to Dubai World of Dh55 billion.
Such a loss for the banks "would hurt 2010 profits, but not jeopardise solvency", said John Tofarides, an analyst at Moody's.
On a brighter note, Moody's said that none of the 13 UAE banks it rates - covering about 85 per cent of the total loan market - was expected to be in breach of the minimum 8 per cent capital adequacy ratio set by the Ministry of Finance, even in the case of a 40 per cent haircut on Dubai World exposure.
Views from both ratings agencies were not encouraging for investors yesterday. They offloaded financial services stocks on the two main UAE equities markets. Most banks traded lower, with Emirates NBD, the country's largest lender, ending 5 per cent lower.
According to S&P, the financial standing of Gulf banks as a group remained under pressure despite recent signs of an overall economic recovery. Lower business volumes, provisioning needs and pressure on liquidity continue to affect the creditworthiness of different banks in varying degrees.
@Email:skhan@thenational.ae
Confirmed bouts (more to be added)
Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez
Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
The biog
Favourite books: 'Ruth Bader Ginsburg: A Life' by Jane D. Mathews and ‘The Moment of Lift’ by Melinda Gates
Favourite travel destination: Greece, a blend of ancient history and captivating nature. It always has given me a sense of joy, endless possibilities, positive energy and wonderful people that make you feel at home.
Favourite pastime: travelling and experiencing different cultures across the globe.
Favourite quote: “In the future, there will be no female leaders. There will just be leaders” - Sheryl Sandberg, COO of Facebook.
Favourite Movie: Mona Lisa Smile
Favourite Author: Kahlil Gibran
Favourite Artist: Meryl Streep
COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
Company profile
Date started: January 2022
Founders: Omar Abu Innab, Silvia Eldawi, Walid Shihabi
Based: Dubai
Sector: PropTech / investment
Employees: 40
Stage: Seed
Investors: Multiple
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Results for Stage 2
Stage 2 Yas Island to Abu Dhabi, 184 km, Road race
Overall leader: Primoz Roglic SLO (Team Jumbo - Visma)
Stage winners: 1. Fernando Gaviria COL (UAE Team Emirates) 2. Elia Viviani ITA (Deceuninck - Quick-Step) 3. Caleb Ewan AUS (Lotto - Soudal)
The specs: 2018 Infiniti QX80
Price: base / as tested: Dh335,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 400hp @ 5,800rpm
Torque: 560Nm @ 4,000rpm
Fuel economy, combined: 12.1L / 100km
The Transfiguration
Director: Michael O’Shea
Starring: Eric Ruffin, Chloe Levine
Three stars
If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
MATCH INFO
Euro 2020 qualifier
Russia v Scotland, Thursday, 10.45pm (UAE)
TV: Match on BeIN Sports