UAE’s demand for the credit is on the rise according to the third quarter Credit Sentiment Survey, a survey of senior credit officers across the banking sector by the Central Bank of UAE (CBUAE).
The credit sentiment results for the September quarter points to increased demand for credit, from both businesses and households, in the UAE, coupled with a softening of credit standards for the household sector.
Business loan demand was especially strong during the quarter, registering the strongest growth since 2014, and reflects ongoing confidence of the corporate sector in the economic recovery.
For the September quarter, survey results suggested that demand for business loans surged further with strongest increase since 2014.
According to survey results, 47.5 per cent of respondents reported no change, 42.5 per cent reported an increase in demand, while 10 per cent of respondents reported a decrease in demand.
Strong outlook for business loans
Looking forward, expectations for business and personal loan demand along with changes in credit standards bode well for credit growth in the months ahead.
The country’s economic recovery is fueling a positive outlook and higher expectations for business loan demand in the months ahead.
Data showed credit demand from corporates and small businesses reported solid increase in demand, which continued to strengthen across all emirates.
“Increased demand was widespread among the different loan categories, comprising large firms, domestic firms, government-related entities, and small and medium enterprises, and was primarily driven by customers’ sales, the property market outlook, interest rates, customers’ fixed asset investments, and seasonal influences,” the report said.
Looking ahead to the December quarter, business loan demand is expected to remain strong across all emirates, although survey respondents expect a minor net tightening of credit standards.
Moderate growth in consumer credit
The central bank survey results showed moderate growth in consumer appetite for credit in the September quarter, albeit at around half the rate as that for business loans, which stemmed from increased demand for personal loans across all emirates. Strengthening demand was evident across all categories with the exception of non-housing investment and car loans, with solid demand for personal – credit card, housing – owner occupier, and personal – other.
Respondents reported that the main drivers of increased demand were the housing market outlook, change in income, financial market outlook, and interest rates. The outlook for the December quarter remains optimistic with survey respondents expecting a strong increase in credit demand and a net easing of credit standards.
Looking ahead to the December quarter, survey respondents indicated that they are anticipating further growth in demand for credit from consumers. By Emirate, respondents expect a marked increase in consumer appetite and demand for personal loans across the board, predominantly in Northern Emirates and Dubai.
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