After racking up losses from real estate and investment loans, banks in the United Arab Emirates are increasing lending to small and medium-sized companies to boost profit as the economy recovers from the credit crisis. Abu Dhabi Commercial Bank, the country\'s third biggest bank by assets, boosted loans to small and medium-sized enterprises, or SMEs, by 25 per cent in the past 12 months, said Colin Fraser, the company\'s Abu Dhabi-based head of wholesale banking. HSBC Holdings Plc\'s UAE unit aims to generate 40 per cent of its commercial banking revenue from SMEs, in coming years, up from 25 per cent today, said Nick Levitt, HSBC\'s head of UAE commercial banking in Dubai. Lenders are trying to tap a wider range of borrowers after property prices plunged more than 60 per cent in the past three years. The slump triggered a doubling in bad loans and forced corporations to restructure debt. Smaller companies are now seeking funds to expand as growth in the region accelerates. Dubai bank stocks climbed 2.7 per cent this year, bucking the ten per cent decline in the Dubai Financial Market General Index. Smaller firms ‘weathered the downturn\' as they \"are well-run businesses, they are conservative and generally owner-managed,\" Fraser said in an August 16 email. Many SMEs, \"are looking to invest into the upturn,\" he said. Economic growth The International Monetary Fund predicts gross domestic product will accelerate to 3.3 per cent in 2011 after expanding 1.4 per cent last year. Bank lending in the UAE expanded 2.4 per cent in the first half of the year after a 1.3 per cent gain in 2010, data from the central bank show. The cost of protecting Dubai\'s five-year debt from default tumbled 237 basis points since reaching a high in February 2010, three months after the state-owned holding company Dubai World asked lenders for a debt standstill, according to data compiled by CMA. The credit default swaps have jumped 76 basis points since Standard & Poor\'s downgraded the US\'s top credit rating on August 5, and traded at 424 yesterday, the highest in the Middle East. Abu Dhabi\'s CDS are at 106 basis points. CMA is owned by CME Group and compiles prices quoted by dealers in the privately negotiated market. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements. Reversing losses Dubai\'s government defines SMEs as companies with as many as 250 employees and sales of as much as Dh250 million. SMEs make up 95 per cent of all Dubai companies, employ 42 per cent of the workforce and contribute 40 per cent to the emirate\'s GDP, according to data released in March. Banks are trying to reverse losses they incurred as they financed Dubai\'s property bubble. Lending jumped by more than 30 per cent annually in the four years to 2008, according to central bank data. Specific provisions for bad loans at UAE banks rose 28 per cent in June from a year ago to Dh47.3 billion, the central bank said. Banks set aside about $500 million to cover losses from Dubai World\'s restructured loans, the IMF said in May.