The Governor of the Central Bank, Mubarak Rashid Al Mansouri, stressed that the Bank is closely monitoring the quality of bank loans granted to the real estate sector, in light of the slow increase in demand for them.

He pointed out in a special statement to «Emirates Today» to a survey conducted, showing the existence of positive effects of the decline in purchase and lease prices, is to improve the affordability of financial properties, allowing a wider segment of individual customers to obtain real estate financing.

Cautious and careful

Central Bank Governor Mubarak Rashid Al Mansouri said in response to questions regarding the decline in prices in the real estate sector and the impact on banks' exposure to this sector. The bank financing granted to the construction, real estate and construction sectors witnessed a slowdown in the annual increase from 12.6% 2017 to 5.7% during 2018.

"We believe that this is normal, as a result of some slowdown in real estate markets during this period. It should be noted that the slowdown in lending reflects primarily a degree of caution in banks, which keeps the integrity of the banking sector ».

Al Mansouri expressed his belief that with the recovery of non-oil activities since the beginning of the second half of last year, which is expected to continue this year, the sector will witness a state of stability to ensure its sustainability.

Credit Concentrations

Asked about any increases in credit concentrations or defaults affecting banks and real estate, the central bank governor said: "We have not seen a significant increase in credit concentrations or a significant decline in exposure to the real estate sector. However, the central bank closely monitors the quality of bank loans granted to the real estate sector, which did not improve during 2018. However, the total provision for non-performing loans in the UAE banking sector, which includes general provisions and specific provisions, increased by 106.2% 2018. The provisioning practices were improved and supervised as a result of the introduction of IFRS 9 during the year.

New decisions

As for any new decisions or regulations that are being worked on to stimulate the market, such as reviewing the rate of advance payments, Al Mansouri said: "It is not the central bank's authority to issue resolutions or regulations to revitalize the real estate sector. Its supervisory and supervisory methodology remains risk-based, ensuring a sound operating environment for the banking sector in the UAE and stable financial intermediation. "

"With regard to the potential positive effects of lower buying and leasing prices, a survey of the banking sector conducted by the Central Bank has shown an improvement in the affordability of residential properties, which would allow a wider segment of individual customers to obtain Real Estate Finance".

Al Mansouri stressed that UAE banks and other market participants should properly manage the risks related to their facilities to the real estate sector.

307 billion dirhams worth of checks traded during the first quarter

Central Bank of Egypt (CBE) data showed that its deposits during the first quarter of this year registered AED 50.4 billion, with withdrawals amounting to AED 52.8 billion.

The figures showed that the number of checks that were offset through the Central Bank system, using its photographs during the first quarter of this year amounted to 6.6 million checks, worth 307 billion dirhams. The value of remittances between banks operating in the UAE through the UAE Exchange System (UAFTS) during the first quarter of 2019 amounted to AED 2.6 trillion, compared to AED 2.4 trillion in the same period of 2018.