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Strong appetite for credit seen in UAE.

The survey respondents, mostly the credit officers at banks, expect an increase in demand growth across the board, with growth in Dubai expected to be strongest.

Abu Dhabi: Dubai saw growth in credit uptake by businesses in the quarter ended December 31, 2014, when compared with the previous three quarters of the year, according to a survey conducted by Central Bank of the UAE.

The quarterly Credit Sentiments survey by the banking regulator is an attempt to measure both supply and demand side factors influencing the local credit market.

The results, which have been published on the website of the banking regulator on Tuesday, reveal interesting indicators as it said lending to trade and commerce was robust in December when compared with the first three quarters of the year.

However, the pace of demand growth has continued to slow to 29.6 per cent down from 33.6 per cent in three month period ended on September 30, the survey showed and also noted softening demand growth in Abu Dhabi and the Northern Emirates.

With respect to expectations for the January-March quarter, survey expects a pickup in demand growth, with approximately two-thirds of respondents expecting demand for business credit to increase.

The survey respondents, mostly the credit officers at banks, expect an increase in demand growth across the board, with growth in Dubai expected to be strongest. However, results from the personal lending survey for the December 31, 2014 ended quarter revealed an increase in the pace of demand growth for personal loans.

According to the survey, majority of the respondents reported an increase in demand for personal loans during the quarter to 20.9 per cent, up from 15.9 per cent recorded in the September quarter.

While demand growth increased in the December quarter, it should be noted that this followed a relatively softer pace of growth reported in the September quarter. In general, the net balance measure suggests an increase in demand across all emirates.

In terms of outlook for personal lending, the credit officers at banks were positive for the January-March quarter. They expected a higher rate of growth when compared with December 31 quarter across all emirates.

The rate of demand growth is expected to be considerably lower than that recorded during the first half of 2014.

By loan type, survey results suggest the acceleration in loan demand growth was driven by stronger pace of growth in the housing -- owner occupier and credit card categories.

Demand growth for mortgage, investment, auto loan, personal were slightly weaker than results from the September quarter survey.

The survey forecasts a growth in demand for loans in the January-March quarter.

When asked about which factors contributed to the change in demand for loans, survey respondents cited the housing market outlook, changes in income and interest rates as most important.

The survey indicated a marginal tightening in credit standards vis-a-vis maximum loan-to value (LTV).

With respect to expectations for the March quarter, a change in the maximum LTV ratio is expected to contribute to the overall tightening of credit standards.


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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:7UNIT
Date:Jan 20, 2015
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