Demand for credit cards, Islamic loans to rise in Q4 2022: UAE Central Bank

Banks and financial institutions expect credit conditions to remain strong for the personal loan sector, the Central Bank said.
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Consumer demand for credit instruments, including strong demand for credit cards and Islamic loans, was prevalent among households in the UAE in the last quarter of the 2022. In addition, the growth in the demand for personal loans was recorded in many categories of loans, except for no-. investment houses, said the UAE Central Bank in its quarterly Credit Sentiment Survey.

The survey showed a continued increase in the demand for loans in the commercial sector. “Factors such as consumer sales, fixed deposits, the economy, financial and housing market outlook, and changes in income continue to play an important role in determining credit needs,” he said. according to the study.

Results showed that while consumer demand for credit increased in the December quarter, the pace of growth slowed since from mid-2022, the top bank said. Looking ahead to the next quarter, banks and financial institutions expect credit conditions to remain strong for the personal loan sector, the report said.

Demand for personal loans remains high

“The increase in loan demand resulted from moderate growth in all countries during the quarter, most notably in Dubai,” the report said.

According to the survey respondents, the positive effects of the improvement of housing and financial markets and changes in income outweighed the negative effects of seasonal effects, competition from other banks and high interest rates in determining demand. of debts in the last three months. Responses to the survey of senior credit officers from banks and financial institutions in the UAE.

On the other hand, the main reasons behind the change in banks and financial companies that provide personal loans in the quarter of December are the quality of the bank’s asset records, the difference in credit potential borrowers and risk tolerance, and the general outlook of the economy, said survey respondents.

Group loans

In terms of loans to companies and small businesses, the data for December showed a strong growth in the demand for loans, with an increase in growth in all countries.

“The increase in demand was strong in all areas of loans and was most prominent in large companies, communities, and public institutions,” the report revealed. The retail and wholesale trades saw an increase in growth during this quarter.

“The demand for loans for manufacturing, property development, construction, transportation, storage and communication was also very strong,” it added. According to the top bank of the UAE, the demand for loans was encouraged by consumer purchases, investment in fixed assets, and the economic outlook.

In terms of credit availability, there was an increase in the willingness of banks and financial companies to extend business loans, supported by the improvement in the quality of assets and the family wealth and changing risk tolerance and creditworthiness of prospective borrowers.

“The outlook for the March quarter remains positive, with survey results showing strong growth in credit demand and willingness to lend,” the report said. .

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