Post by Larani on Jul 22, 2009 2:52:15 GMT 4
UAE bank provisions soar to $2.62 bln
Jul 21, 2009
United Arab Emirates banks saw their general provisions rise to 9.6 billion dirhams ($2.62 billion) at the end June, an increase of 81 percent on the beginning of the year, central bank data show.
The 9.6 billion dirhams figure represents a 50 percent jump on the 6.4 billion dirhams of banks' general provisions at the end of March, data posted on the central bank's website showed on Monday.
"Given the turnaround in the credit cycle, it's no surprise that provisioning is rising. Actually, I would be much more concerned it is was not," said Simon Williams, chief economist at HSBC Middle East. "The numbers are consistent with slowing private consumption and investment spending."
Specific provisions for non-performing loans rose to 23.9 billion dirhams in June, up 9.6 percent from 21.8 billion dirhams at the end of March, according to the central bank data.
Lenders in the are expected to take provisions in light of difficulties at Saudi conglomerates Saad Group and Ahmed Hamad Al-Gosaibi and Brothers Co in repaying some of their debts. Some estimates put global banks' exposure to the two groups at as much as $16 billion.
Last week, Central Bank Governor Sultan bin Nasser al-Suwaidi said the country's lenders will take provisions for both Saudi companies in their year-end results.