Four UAE banks have been placed on review for possible downgrade, Moody's Investors Service said late yesterday. Emirates Bank International, National Bank of Dubai, Mashreq Bank and Dubai Islamic Bank will have their financial strength ratings and long-term debt and deposit ratings placed on review. The move was triggered by the strained domestic property market, particularly in Dubai, as well as an economic slowdown forecast for this year with a modest recovery in 2010, Moody's said.
The agency expects that the pressures facing the country's banking system will result in rising corporate and retail lending defaults, with the latter of particular concern among unsecured credits. However, during the first two quarters of this year, the rated banks reacted to the expected drop in asset quality by increasing their provisioning levels and Tier 1 capital ratios, Moody's said. Moody's said it would complete the review in coming months.