RIYADH: Despite anticipating a deceleration in economic growth, Moody’s Investor Service has maintained a stable outlook for the UAE’s banking sector. In its most recent projection, the bond credit rating subsidiary of Moody’s Corp. predicted a steady 4 percent gross domestic product growth for the UAE in 2023 compared to a 7.6 percent expansion in 2022. An increase in oil prices is set to boost private consumption and investment in the country’s non-hydrocarbon sector where banks operate, Moody’s’ latest report stated. “Consequently, we expect problem loans to decline, although large loan restructurings will keep loan-loss provisioning charges broadly flat,” it said. The UAE banking sector is set to witness modest yet meaningful profitability growth by strengthening loan portfolios and growing operating income. According to the report, the trajectory will likely bring the sector back to its pre-pandemic financial health, indicating a resilient recovery amid global economic challenges. The UAE banks’ robust capital buffers further solidified the steady outlook. Fueled by resilient oil prices, domestic deposits are projected to rise, reinforcing the financial soundness of the sector. The rating agency highlighted an optimistic forecast, anticipating that the “funding and liquidity conditions will remain strong,” thereby underlining the sustainable health of the UAE banking system. Furthermore, the Central Bank of the UAE released its Monetary, Banking, and Financial Markets Developments Report for the first quarter of 2023, highlighting increased assets, gross credit and deposits. It indicated that the total assets of banks operating in the UAE increased by 2.6 percent quarter over quarter to reach 3.764 billion dirhams ($1.02 billion). Moreover, gross credit increased by 0.9 percent QoQ, while customer deposits rose by 3.8 percent compared to the quarter before. Resident deposits also increased by 4.1 percent QoQ settling at 2,092 billion dirhams, while nonresident deposits rose by 0.4 percent in the same period, amounting to 213.4 billion dirhams.