UAE Central Bank adopts an improved methodology for reporting non-performing loans

Media IN  Abu Dhabi 26th-06-2019

The Central Bank of the UAE, in consultation with the International Fund, has improved its reporting standards on non-performing loans in the UAE banking system in line with international best practices.

According to the new reporting standard to be implemented from the third quarter of 2019, the ratio of non-performing loans in the UAE banking system was 5.6% at the end of 2018, compared to 7.1% in accordance with the previous reporting standard.

The Central Bank is working to publish such figures, based on its keenness to establish the principle of transparency in all matters related to the banking system and in line with international practices in this regard.

This change in methodology will be reflected in subsequent publications by the UAE Central Bank and in communication with stakeholders as of the third quarter of 2019.

The Emirates Central Bank regulations require interest to be suspended on loans that are past due 90 days or provisions have been made.

Pending interest can not be added to the profit and loss accounts, and the outstanding interest is not considered part of the non-performing loans.