United Arab Emirates banks will be able to manage losses from a downturn in Gulf Arab stock markets after making strong profits last year, the central bank governor said on Sunday.
Retail investors in the UAE borrowed to invest in stock markets in Dubai and Abu Dhabi, which rallied to record highs last year and closed last week at just above two-year lows.
"We have to keep watching the exposure of banks to financial markets," Sultan Nasser al-Suweidi told a Middle East Economic Digest conference in Dubai.
"Some banks will suffer some losses. But these are manageable,"-AFP Suweidi told Reuters earlier.
In May the central bank asked banks to report the level of their exposure to stock markets. In September Suweidi said a detailed study had found that borrowing by stock market investors accounted for less than 10 percent of bank lending.
"The steep decline we have seen during the last year did not really affect bank tremendously," Suweidi told the conference.
"We have to control credit through the banking system for equity purchases."
Stock market-related revenues such as trading commissions and fees from initial public offerings accounted for as much as 60 percent of UAE banks' income in 2005, when most banks reported record profits. Those profits would help cushion the blow this year, Suweidi said.
Comments
Comments are closed.