(Bloomberg) — The UAE’s central bank is working on new rules that will loosen the cap on bank lending to the struggling real estate industry.
UAE banks can currently lend as much as 20% of customer deposits to the property industry. That will be raised to a still-undecided figure but lenders that exceed 20% would incur a capital charge, central bank Governor Mubarak Rashed Al Mansoori said in Abu Dhabi on Sunday.
“We need to be flexible,” Al Mansoori said at a conference. But banks would “need to assess the risk-return profile of this investment. Is it worthwhile, do I want more capital?”
Banks in the second-biggest Arab economy have called on policymakers to loosen the limit amid a property slump that has affected lending.
Al Mansoori also said:
- The UAE economy is expected to expand 2.4% in 2019 and accelerate at a faster pace next year
- UAE banks’ third-quarter non-performing loans stood at 6.4%, compared with 5.7% in the year-ago period