Standard & Poor’s has lowered its outlook for two UAE banks owing to weaker oil prices and an expected economic slowdown in the UAE.
It said it had lowered its outlook to stable from positive for Mashreq and Abu Dubai Commercial Bank (ADCB).
The move reflects “weakening local economic conditions in the banking system”, the agency said.
“After a few years of improving asset quality, declining loan losses, and improving financial performance UAE banks have now entered into a more challenging operating environment.”
The agency also forecast continued volatility in the UAE’s equity markets and a correction in residential property market.
All of these factors will lead to a deterioration in the asset quality of UAE banks and higher credit losses this year and next year, the agency said.
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