UAE real GDP expected to grow 5.3 percent in 2024
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S&P Global Ratings, the world’s leading credit rating agency, expects the UAE’s real GDP to grow by 5.3 percent in 2024, compared to 3.4 percent in 2023.
In a new report published today, the credit rating agency said UAE banks reported exceptional profits for the full year 2023 due to lower provisioning requirements and higher interest margins, as well as improved liquidity levels as growth of deposits exceeded the growth of new loans. The report also notes that the outlook for UAE banks is stable.
The agency estimates that increased oil production and support from non-oil sectors will boost economic growth in the UAE this year. Non-oil GDP is likely to continue growing, driven by the performance of the hotel, real estate and financial services sectors.
S&P Global Ratings He also noted that some UAE banks achieved record profits in 2023 due to strong credit growth in a rising interest rate environment. Furthermore, the improving economic environment means that provisioning requirements for new credit losses remained low.
The increase in net profit was also supported by growth in non-interest income, reflecting increased business and commercial activity.
Standard and poorwait the US Federal Reserve cut interest rates by 100 basis points in the second half of the year, noting that given the pegging of the UAE dirham to the US dollar, the agency expects the UAE Central Bank to do the same.
The agency believes interest rates will remain high for longer, supporting banks’ net interest margins. Coupled with a largely stable cost of risk, the profitability of UAE banks is likely to remain strong. The agency also expects retail lending to remain strong as banks continue to expand in this profitable segment.
The agency said UAE banks maintain high liquidity, with the average cash and money market instruments of the 10 largest banks reaching 21.8 percent by the end of 2023. Strong core customer deposit bases, which grew around 12 percent last year, and limited dependence. on external financing contribute to the financing structures of UAE banks.
Standard and poorHe noted that UAE banks remain in a strong position in terms of net foreign assets, which increased to 27.9 percent of system-wide domestic loans as of November 30, 2023, from 9.6 percent as of November 30, 2023. end of 2021.
News source: Emirates News Agency
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