Increasing interest rates fail to dampen loan demand: UAE Central Bank survey

Increasing interest rates fail to dampen loan demand: UAE Central Bank survey

“Credit sentiment for the quarter ahead remains strong, with survey respondents maintaining optimistic expectations for further demand growth while financial institutions maintain solid credit appetite,” the report said.

The strong loan demand was seen in both categories – individuals, and corporates and small businesses.

In terms of individual lending, the “net balance measure” hit its highest level since June 2014, the survey said, and growth in demand for personal loans was registered across all loan categories, with solid demand for housing-related loans (such as owner-occupier and investment), credit cards and car loans. (Net balance is calculated as the weighted percentage of respondents reporting an increase in demand for loans minus the weighted percentage of respondents reporting a decrease in demand for loans.)

“Looking ahead to the next quarter, banks and finance companies expect credit demand and supply conditions to remain strong for personal lending,” the Central Bank said in the report.

Increased demand was widespread among the different loan segments, though the pace of growth was relatively modest for non-residents.

Growth in the retail and wholesale trade sector, followed by manufacturing and property development, played a vital role in determining credit demand. Solid demand for credit was strengthened by customers’ sales, the economic and