111% bank coverage of bad loans

The Central Bank urges banks to strengthen efforts to combat money laundering and terrorist financing

  • The Central Bank confirms its commitment to enhancing the monetary and financial stability of the country.

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  • Abdul Hamid Muhammad Saeed: “Supervisory initiatives aim to ensure that banks comply with legal obligations.”

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The Central Bank affirmed that to reduce the risks of financial crimes and maintain the stability of the UAE's financial system, banks must make more efforts to confront money laundering and combat terrorist financing.

In addition, the Central Bank confirmed the overall financial soundness of the banking sector in the UAE by the end of the first half of this year, with its liquid assets worth 432.4 billion dirhams, in addition to allocations to cover all non-performing and non-performing loans by 111%, which amounted to 131 billion dirhams. , Offset by 145.3 billion dirhams financial allocations to cover it.

Periodic meeting

In detail, the Governor of the Central Bank, Abdul Hamid Muhammad Saeed, held his periodic meeting with the chief executives of the major banks operating in the country recently, to see the extent to which the banking sector is prepared to deal with the repercussions of the "Covid-19" epidemic, and the importance of strict controls to reduce the risks of money laundering and combat the financing of terrorism. .

The meeting began with a review of the macroeconomic situation with a spotlight on the banking sector.

The meeting discussed developments in the targeted comprehensive economic support plan, temporary exemption developments, and the importance of developing effective policies and measures to restructure loans.

To date, more than 300,000 individuals and nearly 10,000 small and medium enterprises, in addition to more than 1,500 private sector companies, have benefited from the targeted economic support plan.

In a statement yesterday, the Central Bank stressed that to reduce the risks of financial crimes and maintain the stability of the financial system of the UAE, banks must make more efforts to confront money laundering and combat the financing of terrorism, and the heads of banks have also been informed of the results of the sanctions examination test. Analyzing and testing penalties examination systems for financial institutions licensed by the newly established Anti-Money Laundering and Terrorist Financing Unit in the Central Bank.

Monetary stability

Abdul Hamid Muhammad Saeed said: “The Central Bank affirms its commitment to enhancing monetary and financial stability in the country through effective supervision, partnership with financial institutions, and providing a coherent financial infrastructure. The continued focus of banks on the main financial ratios in addition to providing assistance to affected clients is necessary to ensure Comprehensive financial stability in the country »

He added, “The supervisory and regulatory initiatives undertaken by the Central Bank aim to ensure that banks operating in the country comply with legal obligations in accordance with the legislation in force regarding anti-money laundering and combating terrorist financing laws and to ensure compliance with the standards of the Financial Action Task Force (FATF), and in a way that enhances the country's position as a distinct financial center. Has a good reputation ».

Financial safety

In addition, the Central Bank stressed the overall financial soundness of the banking sector in the UAE by the end of the first half of 2020, with its liquid assets worth 432.4 billion dirhams, in addition to allocations to cover all non-performing and non-performing loans by 111%.

According to statistics, the value of non-performing loans at the end of the first half of this year recorded 131 billion dirhams, offset by 145.3 billion dirhams financial allocations to cover them.

Statistics indicated that non-performing or non-performing loans recorded at the end of the first half, an increase to 131 billion dirhams, compared to 111.6 billion dirhams at the end of last December, with an increase of 19.4 billion dirhams during a six-month period under pressure from the repercussions left by the Corona pandemic.

On the other hand, statistics revealed that the allocations made by banks to cover non-performing or non-performing loans in the sector amounted to 145.3 billion dirhams at the end of the first half of this year, including special allocations and pending interest of 107.2 billion dirhams and general allocations of 38.1 billion dirhams.

The Central Bank has an integrated system for classifying loans as it has defined them in five types: ordinary loans, supervised loans, sub-standard loans, and doubtful loans, in addition to non-productive loans, which are non-performing loans or loss loans, and the latter is considered by the central bank as “non-performing” loans. Productive »or faltering and is considered a loss, and it is the bank in which all means are used to collect it and nothing mentioned is obtained from it, or there is a possibility that it will not be collected at all, and in this case a provision is made at 100% of the entire loan balance.

The «Central» added that the banking sector in the state possesses liquid assets, estimated at 432.4 billion dirhams, at the end of the first half of this year, compared to 422.6 billion at the end of the same period of 2019, an increase of 9.8 billion dirhams, equivalent to an annual growth of 2.3 %.

Liquid assets constitute 14% of the total assets of the banking sector in the UAE, estimated at more than 3 trillion and 83 billion dirhams, by the end of the first half of 2020.

Statistics revealed that the banking sector still enjoys high levels of capital solvency, which reached 17.6% at the end of the first half of 2020, which is much higher than the requirements of Basel 3 and the Central Bank, which amounted to 10.5%.

Liquid assets

Liquid assets in the banking sector are considered one of the indicators of financial soundness, with its ability to face crises, and it consists of liquid assets in addition to liquid cash inside banks, in addition to the liquidity and liquid securities that the Central Bank possesses such as sukuk, bonds, etc.

Liquid assets in the banking sector also include the compulsory reserve imposed by the central bank, certificates of deposit maintained by banks at the central bank, in addition to zero risk weighted government bonds, public sector debt and cash in banks.

432.4

One billion dirhams is the volume of liquid assets in the banking sector by the end of the first half of this year.

300,000 individuals benefited from loan restructuring policies and measures.

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