Banks role vital for property recovery in Dubai but they are facing default timebomb

[Nicholas Wallwork]

Banks are the key to a property revival in Dubai, according to real estate and finance experts, but international ratings agency Standard & Poor’s is warning that the sharp correction in the emirate’s property sector has created new risks.

S&P cut its credit ratings on four Dubai-based banks. On Emirates Bank International PJSC, National Bank of Dubai, and Mashreqbank* it was cut by one notch to A-minus from A and the counterparty rating on Dubai Islamic Bank was cut by one notch to BBB-plus from A-minus.

‘The economic slowdown, stock market decline, and dropping real estate prices are raising significant hurdles for these Dubai-based banks. Looking forward, we expect these factors to significantly slow business growth and lead to a deterioration in asset quality and profitability,’ the agency said in a statement.

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