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UAE banks considering limits on real estate lending

The United Arab Emirates' banking association has proposed a cap on banks' real estate lending to protect them from overexposure to the sector, Reuters reported, citing Abdul Aziz al-Ghurair, head of the UAE Banking Federation.

Local banks will review and provide feedback on the proposed limits, al-Ghurair said, without providing additional details.

Loans to real estate and construction comprised roughly 20% of banks' gross loans at the end of the first quarter, the newswire noted, citing central bank data.

Al-Ghurair, who was recently named chairman of Mashreqbank PSC, said loan growth was almost flat for his bank and the whole sector, adding that lenders are being hit by lower interest rates due to their high level of capital, shareholder equity and deposits.