S&P: The impact of the Russian-Ukrainian conflict on the UAE banking system is limited

The agency "S&P Global" credit ratings confirmed that the impact of the Russian-Ukrainian conflict on the UAE banking system is considered limited at the present time.

In a report issued yesterday entitled "Prospects for the UAE banking sector...on the road to recovery," the agency pointed out the possibility of an indirect positive impact through one of the new inputs, such as the rise in oil prices.

The agency expected that the activity of the UAE economy will accelerate in 2022, as a result of high oil prices, supportive government policies, the recovery of non-oil activities and the Dubai Expo, bringing the nominal GDP to pre-pandemic levels.

She pointed out that the UAE banking system possesses a large amount of external liquid assets that can be used in the event that the ability of banks to access external financing is restricted, as debt represents 23% of total banking assets at the end of last November, suggesting that the government will support the banks in the event it calls for the need.

"Mortgage loans contributed about 20 to 25% of the demand for residential properties in Dubai, and we expect this demand to slow once interest rates start to rise," the agency said.

She explained that the stress tests that banks apply to individual customers on mortgages when creating the mortgage with regard to the increase in interest rates, and the details of exposure.

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