LONDON: Problem loans in the UAE’s banking sector are set to rise by the end of 2018, ratings agency Moody’s Investors Service warned, blaming “sluggish” economic growth seen this year.
The agency has forecast that non-performing loans could reach 5.5 or 6 percent of total gross loans next year, an increase from the 5.3 percent recorded in June 2017.
This is at the higher end of the scale when compared to the UAE’s peers in the Gulf region where non-performing loans range between 1.6 and 6.3 percent, Moody’s said in a note issued on Monday.
While Moody’s has maintained its outlook for the country’s banking sector as “stable,” the agency said a high concentration of loans to government-related institutions and to the volatile real estate sector continues to pose risks to the quality of loans in the UAE.
It also warned of the level of exposure banks have to the construction and property sectors, industries that suffer from a higher-than-average historical delinquency level. This sector represented 19 percent of the banks’ loan books as of June 2017.
This increases to 25 percent of gross loans when personal loans for business purposes are included. Moody’s estimates that a proportion of these personal loans are likely to be used for some form of real-estate-related purpose.
The agency also forecasted that delinquencies among retail and small- to medium-sized businesses (SMEs) would increase, although overall corporate loan performance would remain “resilient.”
Household loan performance would weaken due to job losses and employment uncertainty constraining the repayment capacity of borrowers, Moody’s said.
However, the agency has forecast an economic rebound in 2018, which could help the banking sector weather any worsening of their loan books.
Moody’s has forecast that non-oil economic activity will boost the UAE’s real GDP growth to 3.2 percent next year, after a forecasted slowdown to 1.1 percent in 2017 and 3 percent in 2016.
Government spending in Dubai and economic activity in trade and financial services will help drive this growth, the report said, as will the construction of large infrastructure projects ahead of the 2020 World Expo in Dubai. The recovery in oil prices during 2017 will also support government spending.
This rebound will boost credit growth in the banking sector, which is forecast to rise by 5 percent in 2018 after a predicted lower growth rate of 2 percent in 2017, the agency said.
Capital levels will also remain “strong” over the next 12 to 18 months, which will provide a “substantial cushion” against softening loan performance, said Moody’s.
The agency expects the banking sector’s funding and liquidity to remain stable over the next 12-18 months. The sector remains primarily deposit-funded, with “moderate reliance” on market funding.
“Stabilizing oil prices and international bond issuances will continue to support funding and liquidity conditions in the country, following a tightening during 2016 amid oil price weakness,” said Mik Kabeya, an analyst at Moody’s.
Banks’ profitability is likely to remain strong, the agency said, with a net income of around 1.5 to 1.7 percent of tangible banking assets over the next 12 to 18 months.
UAE problem loans to rise, Moody’s warns
UAE problem loans to rise, Moody’s warns
Oman’s non-oil exports rise 7.5% as diversification gains traction
RIYADH: Oman’s non-oil exports rose 7.5 percent to 6.7 billion Omani rials ($17.4 billion) in 2025, highlighting diversification gains even as lower crude prices dragged overall export earnings lower.
Data from the National Centre for Statistics and Information showed re-export activity grew faster, increasing 20.3 percent year on year to 2.05 billion rials, supported by stronger trade flows through the Sultanate’s ports and logistics hubs.
The expansion reflects government efforts to boost industrial output and develop export-oriented sectors as Oman works to reduce reliance on hydrocarbons under its economic diversification strategy.
The improvement in non-oil trade follows Fitch Ratings’ decision in December to upgrade Oman to investment-grade status, raising its long-term foreign-currency rating to BBB- from BB+. The agency cited stronger public finances, an improved external position, and continued fiscal discipline, noting government debt had declined to around 36 percent of gross domestic product in 2025 from about 68 percent in 2020.
“The Sultanate of Oman has made notable advancements in diversifying its exports and enhancing its economy sustainably, particularly through non-oil sectors,” said Raymond Khoury, partner and public sector lead at Arthur D. Little Middle East.
He added: “To build on this progress, it is crucial to increase investments in modern technologies like artificial intelligence, especially by establishing advanced data centers to support digital sovereignty and integrating AI into manufacturing and agriculture to boost productivity and further diversify the export portfolio.”
The newly released data further showed that products from chemical and related industries, metal products, plastics, as well as machinery and electrical equipment were among the most prominent Omani non-oil exports last year.
The figures also indicated a decline in the value of oil and gas exports, which fell to 14.5 billion rials, marking a 15.2 percent year-on-year decrease.
Oil exports were affected by a drop in the average price of Omani crude to $71 per barrel last year, compared with $80.8 per barrel in 2024.
Total oil exports last year reached 307.9 million barrels, compared with 308.4 million barrels in 2024, while average daily oil production increased from 992,600 barrels per day in 2024 to more than one million barrels per day in 2025.
The data also showed that the value of Oman’s merchandise exports reached 23.2 billion rials last year, reflecting a 7.1 percent decline from 2024, mainly due to lower oil export revenues. Merchandise imports, meanwhile, rose by 2.7 percent during the same period to exceed 17.1 billion rials in 2025.
Statistics further indicated that Oman’s total merchandise trade stood at 40.4 billion rials in 2025, compared with 41.7 billion rials in 2024, reflecting the decline in oil export values.
Regarding trading partners for non-oil exports, the UAE topped the list with more than 1.31 billion rials in 2025, up 25.3 percent year on year.
The value of Omani non-oil exports to Saudi Arabia rose from 849 million rials to 1.07 billion rials during the same period, while exports to India increased by 6 percent to approximately 700 million rials. Meanwhile, non-oil exports to South Korea and the US declined by 26.1 percent and 13.3 percent, respectively.
The UAE also ranked as Oman’s largest partner in re-export activities last year, accounting for 35.2 percent of total re-export trade, which amounted to 2.05 billion rials. The value of goods re-exported to the UAE reached 724 million rials, marking annual growth of 27.2 percent.
Iran ranked second with 365 million rials, registering a modest increase of 1.6 percent compared with the previous year. The UK came third with 207 million rials, followed by Saudi Arabia in fourth place with 191 million rials and India in fifth with 84 million rials.
Merchandise imports from the UAE increased by 5.4 percent during the year, exceeding 4.1 billion rials.
Imports from China rose by 5.7 percent to 1.93 billion rials, while imports from India declined by 3.8 percent to 1.44 billion rials. Imports from Kuwait fell from 1.69 billion rials to 1.31 billion rials, while imports from Saudi Arabia declined from 1.28 billion rials to 1.21 billion rials.
