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Cracks Start to Show for U.A.E. Banks With Bad Loans on Horizon

  • Provisions could rise by as much as 20 basis points: analysts
  • Defaults are likely to increase in property and SME business
Dubai Real Estate And City Skyline As Gulf Economies Slow Down
Photographer: Christopher Pike/Bloomberg
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Lenders in the United Arab Emirates will come under pressure this year as a property and retail slump take its toll.

One of the country’s smallest banks is being bailed out, problem loans are expected to rise this year and lenders are exploring mergers to stay competitive. Slow property sales, higher interest rates and a rise in lending amid improved economic growth could mean provisions jump as much as a quarter, according to analysts.