The United Arab Emirates central bank said it extended some stimulus measures introduced last year until mid-2022 to mitigate the economic impact of the coronavirus crisis.Sale in Qatar | Property Hunter Qatar | Apartments
The Targeted Economic Support Scheme (TESS) provides banks with temporary relief for companies and individuals affected by the pandemic of COVID-19 and provides additional lending capacity via the relief of existing capital and liquidity buffers.
Banks will continue to be eligible to access the collateralized liquidity facility of 50 billion dirham (13.61 billion dollars) by 30 June next year, according to the Central Bank (CBUAE).
The bank's finance for TESS loan delays will be extended until the end of this year.
"Financial institutions expect to prioritize TESS lending to those sectors, businesses and households most affected by the TESS, thus contributing to a balanced regeneration of the diversified economy of the United African States," she said.
The International Monetary Facility estimates that the UAE's economy fell by 5.9 percent last year as key sectors such as tourism and aviation were severely hurt by the constraints on the new coronavirus.
According to the IMF, real gross domestic product (GDP) is expected to grow 3.1 percent this year.
Last year the pandemic, low oil prices and sluggish immobilization – an important component of UAE GDP – weighed UAE banks.
Capital Economics has estimated that non-performing loans are 10.6% of the total loans. The highest ratio since 2005.
S&P Global Ratings said in a report last week, that continued pressure from property due to over-supply and low demand from the tourism, hospitality and aviation sectors will probably continue to weigh up the quality of the assets of banks in the next 12 to 24 months.
But banks are expected to maintain "sufficient sources of financing and liquidity" in the midst of a rebound in oil prices.
NBD, the largest bank in Dubai, posted a 12% increase in net profit for the first quarter of 2012 citing improved economic conditions from COVID-19 and degradation.