Fitch: UAE Islamic Banks to See Weaker Metrics in 2020 Led by COVID-19 and Low Oil Prices

According to Fitch Ratings (Fitch)’s report titled “UAE Islamic Banks: 2019 Results Dashboard”, Islamic banks in the United Arab Emirates are looking at a subdued 2020, given the anticipated lower profitability and business volumes as well as higher financing impairment charges, as a result of COVID-19 and lower oil prices.

Fitch also expects asset quality to weaken, noting however, that the full impact on the banks will be camouflaged in the short-term by financing deferral programmes and regulatory flexibility allowed for banks to recognise impairments.

Whilst Fitch expects Islamic banks to maintain sound liquidity in the short-term, weaker asset quality and lowe...