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Banks and finance firms expect credit conditions in the personal lending sector to remain strong, the central bank’s survey showed.
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Consumer demand for credit instruments, including strong demand for credit cards and Islamic loans, is prevalent among households in the UAE in the final quarter of 2022. In addition, demand for personal loans increased across most loan categories, non-UAE central banks said in their quarterly survey of credit sentiment, housing investment.
The survey showed continued growth in loan demand from the corporate sector. “Factors such as customer sales, fixed asset investment, the outlook for the economy, financial and housing markets, and income changes continue to play a key role in determining credit demand,” the survey said.
The top bank said the results showed that while consumer demand for credit picked up in the December quarter, the pace of growth has slowed markedly since mid-2022. Looking ahead to the next quarter, banks and finance firms expect credit conditions to remain strong in the personal lending sector, the report said.
Demand for personal loans remains high
“The increase in loan demand stemmed from moderate growth across all emirates during the quarter, most notably in Dubai,” the report said.
According to survey respondents, the positive impact of improving housing and financial market prospects and changes in incomes outweighed the negative impact of seasonal effects, competition from other banks and rising interest rates that have determined credit demand over the past three months. Respondents to the survey were senior credit officers at banks and financial institutions in the UAE.
On the other hand, the main factors driving changes in the willingness of banks and finance firms to extend personal loans in the December quarter were differences in the quality of banks’ asset portfolios, the creditworthiness and risk tolerance of potential borrowers, and the general economic outlook, survey respondents said. said.
corporate sector loans
On lending to corporates and small businesses, the December figures highlighted strong growth in demand for business loans, with solid growth across all emirates.
“Demand growth was strong across all loan categories, most notably among large corporations, locals and government-related entities,” the report said. The retail and wholesale trade sector posted the strongest growth during the quarter.
“Demand for loans in manufacturing, property development, construction, transportation, warehousing and communications was also relatively strong,” it added. The UAE’s largest bank said loan demand was boosted by customer sales, fixed asset investment and the economic outlook.
In terms of credit availability, banks and finance firms have increased their willingness to extend business loans, supported by improvements in asset quality and the economic outlook, as well as changes in the risk tolerance and creditworthiness of potential borrowers.
“The outlook for the March quarter remained positive, with survey results pointing to strong growth in credit demand and willingness to lend,” the report said.
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