UAE banks are showing a healthy return to profitability with reasonable margins and they have even more encouragingly started to lend again, even if it seems that they are offering rather too many loans to their retail customers and have yet to realise that deepening the recovery throughout the economy needs more liquidity to be offered to the small and medium-sized companies that provide the bulk of new jobs in the UAE . It is still the middle of the reporting season and not all banks have reported their 2013 results, but it is already clear that 2014 is set to bring strong loan growth and increased profitability — thanks to a much healthier economy in the country and a much more upbeat corporate sector. Growth in Dubai is leading the way and plans for Expo 2020 is starting to impact credit aspirations for 2014. One problem that may cause some disquiet is the threat of possible rescheduling of some of the major loans still hanging over the banking sector. Even if some of the troubled companies successfully rescheduled their loans in the past few years, they may seek to do so again. But as the economy picks up and banks do better, this threat is becoming much less important than what it was a few years ago when such rescheduling had a major impact on the basic health of the banks.
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