UAE banks provisions down for 1st time

UAE banks slightly reduced bad loan provisions in October for the first time since they launched a provisioning drive to strengthen their financial position in the wake of the 2008 global financial crisis, figures by the Central Bank showed on Wednesday. The combined assets of the country\'s 23 national banks and 28 foreign units also slipped slightly but deposits surged and lending remains stagnant. From around Dh65.4 billion at the end of September, the banks\' provisions edged down to nearly Dh65.3 billion at the end of October. It was the first decline in nearly four years and it followed a rapid rise in the provisions by banks seeking to bolster their financial base and cushion their purses against massive loans they had lavished during the boom years of 2006-2008. The provisioning drive gained pace after a severe debt default crisis that hit two Saudi family businesses in 2009 and the ensuing debt issue in Dubai. Total provisions taken by banks stood at around Dh6.1 billion through 2011 while they surged to around Dh10 billion in 2012. Analysts said the provisions were high in the first half of 2012, adding that they sharply slowed down in the second half as banks started to recover and reverted to profit growth. UAE national banks listed on the bourse netted around Dh17.9 billion in the first nine months of 2012, a slight increase over the Dh17.5 billion earned in the first nine months of 2011, according to their balance sheets. The figures by the Central Bank showed the combined assets of the 52 banks slipped to Dh1,762.9 billion at the end of October from Dh1,763.9 billion at the end of September, maintaining their position as having the largest asset base in the Middle East. Deposits surged to Dh1,262.3 billion from about Dh1,143.8 billion but loans remained stagnant at Dh1,103.2 billion, indicating banks are still risk-averse