Dubai: The credit demand the UAE is expected to accelerate in the first quarter of 2015, keeping up with the overall trend last year according to quarterly credit sentiment survey of lenders by the UAE Central Bank.
The survey for the fourth quarter of 2014 showed that demand for credit remained strong in the fourth quarter despite a some easing in towards the year-end compared to the first three quarters of the year.
The credit sentiment survey, which collects information from all lenders in the country, was developed in the first quarter of last year and the central bank on Tuesday published the survey report for the fourth quarter of 2014.
Overall, results from the survey suggest that credit conditions within the UAE remain supportive of economic growth with near term expectations of a continuation of such trends.
The UAE is expected to report a credit growth of about 10 per cent this year. Bankers expect similar growth next year. “I think 10 per cent is a healthy loan growth rate for the banking sector and the economy and I expect the banking sector to maintain this growth levels in 2015,” Abdul Aziz Al Ghurair, CEO of Mashreq, told Gulf News in a recent interview. Mashreq reported a 15.1 per cent loan growth last year.
According to survey respondents, demand growth for business credit, while still growing, slowed noticeably in the December quarter. Such results were primarily attributable to the reported softening of credit appetite from government related Entities (GREs) and small and medium enterprises (SMEs), the report said.
Credit demand growth was reported to have weakened across key such as construction, property development and retail and wholesale trade. Credit standards, on the other hand, were relatively unchanged.
The net balance measure for business credit demand, that is, the weighted percentage of respondents reporting higher demand for loans minus the percentage reporting lower demand fell to 29.6 last quarter from 33.6 in the quarter ending September 30, because of slower growth in Abu Dhabi and the northern emirates.
In contrast, the survey results showed that demand growth for business credit in Dubai strengthened in the December quarter. With respect to expectations for the March quarter, survey respondents expect a strengthening in demand growth, with approximately two-thirds of respondents expecting demand for business credit to increase in the quarter.
By emirate, survey respondents expect an increase in demand growth across the board, with growth in Dubai expected to be strongest. Demand growth for personal credit improved during the December quarter according to survey respondents. However, the December quarter results followed a relatively weak September quarter and growth had not reverted to levels evident through the first half of 2014.
For personal loans, the net balance measure rose to 20.9 last quarter from 15.9 in the September quarter, and is expected to rise further in the current quarter while remaining below the levels of the first half of 2014.
For the March 2015 quarter, survey respondents expect a stronger pace of demand growth, while credit standards are expected to tighten at the aggregate level due to the expected tightening in maximum loan-to-value (LTV) ratios.
