London: Abu Dhabi’s banking sector performance has improved in line with the strengthening of the local and Dubai economies, according to Fitch Ratings.
“NPLs of Abu Dhabi banks have declined to a five-year low and provisioning are at a six-year high, although asset quality issues remain. Capital adequacy is high, at 17.8% at end-March 2014,” Fitch in a statement said.
Fitch does not consider that surging residential real estate prices pose a serious risk to banks. Unlike the 2008 boom, the current run-up in prices is not reliant on leverage and is backed by stronger fundamentals. The authorities are also more attuned to the risks from rising house prices. Rising rents and a buoyant economy are pushing up inflation, which is forecast to average 5% in 2016.