The international credit rating agency, Standard & Poor's, expected that UAE banks would remain far from the negative economic repercussions of the Ukrainian crisis, so that these repercussions would not be left on state banks. Only a limited or slight effect.
The agency said in its report that its expectations came due to the huge capabilities available to the UAE government, as well as the government's desire and strong readiness to provide the banking sector with support when needed.
The report dealt with the banking sector in the UAE and the expected impact of the repercussions of the Ukrainian crisis on it. The report began by talking about the overall economy in the UAE, stating that the rise in oil prices will raise levels of confidence in the country. The country's economy, and high oil revenues will accelerate the pace of economic growth in the country.
Standard & Poor's forecast in the report that the real GDP of the UAE will grow this year by 3.8% in 2022.
The report touched on the levels of growth in lending in the banking sector in the UAE. It expected that the country's rapid economic growth would, in turn, accelerate the pace of growth in lending.
The report stated that the exposure levels of UAE banks included in Standard & Poor's ratings to Russian or Ukrainian banks are minimal. Accordingly, the report does not see any significant direct effects of the Ukrainian crisis on the quality of assets owned by the rated UAE banks.
With regard to the expected profitability levels for UAE banks, the report expected them to rise supported by higher interest rates. He also expected that the net income of UAE banks would increase by 15%, while the return on assets owned by these banks would rise by 1.4% for every 100 basis points increase in the interest rates applicable to UAE banks.
