The UAE's economic growth is expected to slow modestly in 2023 due to Opec-agreed oil production cuts and deceleration in the non-oil sector due to higher interest rates, said S&P Global Ratings in a new report.

Along with tighter monetary policy, this will lead to lower credit demand and growth for banks, according to the "UAE Banking Sector 2023 Outlook: Slower Growth, Strong Fundamentals" report.

“We believe the rise in residential real estate prices will also likely moderate in 2023 after a strong 2022,” said S&P Global Ratings credit analyst Puneet Tuli.

"In this context, we think the deterioration in asset quality indicators will be marginal, and banks' profitability will continue to improve on the back of higher rates.

"Banks will also continue to benefit from stable and strong capital buffers, good funding profiles, and expected government support,” he added. – TradeArabia News Service