UAE banks’ profits to be hit by lower interest rates, high impairments in 2020

UAE banks’ profits to be hit by lower interest rates, high impairments in 2020

Filed on June 23, 2020 | Last updated on June 23, 2020 at 05.37 pm. The UAE banks' profitability will come under pressure in 2020 due to lower interest rates, non-interest income and high loan impairment charges, Fitch Ratings said on Tuesday, June 23.. Redmond Ramsdale, head of Middle East Bank Ratings at Fitch, said UAE banks' standalone credit profiles are also likely to weaken due to coronavirus crisis and lower oil prices.. "Asset quality will also weaken, as not all borrowers will be able to weather the impact of the economic downturn, but the true impact will be masked in the short-term by loan deferral programmes and regulatory flexibility for banks to recognise impairments under IFRS 9," Ramsdale said in a note released on Tuesday.. Last week, Moody's Investors Service changed eight UAE-based bank's outlook from stable to negative, reflecting potential material weakening in their standalone credit profiles, amid a challenging operating environment in the UAE due to the coronavirus outbreak, low oil prices and pre-existing economic challenges.. The eight banks are Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank, HSBC Bank Middle East Limited, Abu Dhabi Islamic Bank, RAK Bank and National Bank of Fujairah..