CBUAE Enhances Reporting of Nonperforming Loans for Banks

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