By: Amr Adel
Dubai – Decypha: UAE banks started to reschedule their debts worth AED 5 billion due from small- and medium-sized enterprises (SMEs), Abdul Aziz Al Ghurair, Head of the UAE Banks Federation told Decypha.
In 2015, the federation announced an initiative to support SMEs experiencing repayment difficulties amid increased challenges they faced due to the drop in oil prices in 2015.
UAE banks incurred losses of AED 10 billion in the past two years due to the issue of SME bad debt, he added on the sidelines of a seminar held in Dubai on 12th of March.
The banking sector seeks to recover debts and reschedule the remaining debts owed by SMEs to contain this issue, he said, adding that the situation is better this year compared to 2015 and 2016.
Al Ghurair suggested that some foundations like Khalifa Fund for Enterprise Development and Mohammed bin Rashid Establishment for SME Development should stop giving direct funds to institutions.
Around 10% of the total bank credit, worth more than AED 1 trillion, is sufficient to fund the SMEs sector, he added.
A smart wallet application is expected to be launched before the end of this year, allowing SMEs to easily pay via mobile phones at discounted fees.
On another note, the banking sector will see a stable performance in its first-half financials this year, with expectations to post higher results in the second half of the same year.
The capital adequacy regulations issued by the Central Bank of the UAE last week will support the sector’s growth and resilience, Al Ghurair explained.
Al Ghurair believes that new mergers are possible in the banking sector, noting that the UAE economy is flexible and dynamic, and needs large banking institutions to support its growth rates.
Translated by: Julian Nabil
