CBUAE Enhances Reporting of Nonperforming Loans for Banks
CBUAE is enhancing, in consultation with IMF, the reporting of nonperforming loans (NPLs) for UAE banking system to align its methodology with the international best practices. To provide increased transparency and comparability with other jurisdictions, CBUAE also published the net NPL ratio. These changes will be reflected in the upcoming publications by CBUAE and in stakeholder communications as of the third quarter of 2019.
Under the previous reporting methodology, NPL ratio of the banking sector in UAE was overstated in comparison with that of the other jurisdictions, due to the inclusion of interest in suspense. Accordingly, under the new reporting standard, the NPL ratio of the banking system in UAE, for the year-end 2018, stood at 5.6% (instead of 7.1% under the previous reporting methodology). For comparative purposes, CBUAE has provided a time series reflecting the enhanced NPL ratio methodology covering the last five years. CBUAE also published the net NPL ratio, which excludes specific provisions held by banks against NPLs. For the banking system in UAE, the net NPL ratio stood at 1.8% at year-end 2018. The net NPL ratio provides a comparison with other banking sectors considering the varying provisioning and write-off policies across different jurisdictions.
Related Link: Notification
Keywords: Middle East and Africa, UAE, Banking, NPLs, Reporting, Credit Risk, IMF, CBUAE
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
David Fihrer
Skilled life insurance actuary; subject matter expert on IFRS 17 and source of earnings
Related Articles
APRA Sets LAC for D-SIBs, Proposes to Enhance Crisis Preparedness
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
EC to Review Macro-Prudential Rules while ESRB Assesses Policy Stance
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
FSB Sets Out Good Practices for Crisis Management Groups
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
APRA Penalizes Heritage Bank for Incorrect Reporting of Capital
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
OSFI Releases Annual Report 2021-2022
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
OSFI Updates Timeline for Implementation of Certain Basel Rules
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EC Defers Adoption of Regulatory Standards for Disclosures Under SFDR
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
FCA Releases MIFIDPRU Application Forms and Third Set of Rules on IFPR
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
APRA Finalizes Capital Adequacy Standards for Banks
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.
