During the meeting, both leaders will discuss ways to strengthen the historic friendship between the UAE and the US and their strategic partnership in all fields
The ratings outlook on top banks Dubai Islamic Bank, Abu Dhabi Commercial Bank, and First Gulf Bank PJSC were lowered to ‘negative’ from ‘stable.’ The ratings outlook on Dubai Bank was changed to ‘stable’ from ‘positive.’
“The ratings action reflects the mounting liquidity pressures in the short to medium term, the growing downward pressures on asset prices and the anticipated profitability pressures from rising funding costs derived from increasingly scarce liquidity and loss of confidence,” said Moody’s in a statement.
The credit ratings agency said that liquidity conditions in the UAE considerably weakened in the third quarter, with the flight of speculative deposits creating substantial short-term liquidity pressures.
It added that soaring loan growth levels and future loan obligations along with maturing medium term loans are also exacerbating pressures on the country’s liquidity.
“The currently excellent asset quality and profitability levels reported by all UAE banks, as a result of the benign credit environment up until autumn 2008, may be negatively affected going forward,” said Moody’s. Moody’s also noted the increasingly tough environment with which UAE banks operate, especially with the slumping real estate activities and the volatility of equity markets. It said it expects more downturn in the property sector due to negative sentiment, lack of affordability and poor systemic liquidity.
“We cannot predict the extent and severity of the property market squeeze. Nevertheless, we remain cautious, particularly with regard to banks whose loan composition appears to be largely titled towards real estate and construction loans.”
During the meeting, both leaders will discuss ways to strengthen the historic friendship between the UAE and the US and their strategic partnership in all fields
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