UAE banks’ asset quality likely to deteriorate but cen bank’s 100 bn dirhams scheme will soften COVID-19 blow – Moody’s
Moody’s expects UAE banks’ asset quality to materially deteriorate amid the COVID-19 pandemic but the support scheme announced on Mar 14 will mitigate the extent of the deterioration by keeping some borrowers' liquidity issues from becoming solvency issues, said the credit rating agency.
The Central Bank of the UAE on Mar 14 released a 100 billion dirhams ($27.2 billion) Targeted Economic Support Scheme to reduce the economic fallout of the COVID-19 pandemic. The scheme will support banks’ liquidity by providing cheap funding to meet cash calls from affected borrowers.
Moody’s said on Tuesday (Mar 17) it expects borrowers in the tourism, transportation, trade and real estate sectors to be the most affected, and small and medium enterprises (SMEs) to be particularly vulnerable to economic shocks.
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