UAE: Lending for personal loans, credit cards grows despite increased rate hike

UAE: Lending for personal loans, credit cards grows despite increased rate hike

Lending to individuals and companies grew in the UAE in the second quarter of 2023 despite an increase in interest rates, according to Credit Sentiment Survey released by the Central Bank on Wednesday.

The survey results showed growth in demand for personal loans was registered across all categories, with solid demand for housing-related, credit cards, car loans, and personal.

While lending to corporates and small businesses showed solid growth, albeit a little slower than the previous quarter.

The Central Bank survey was based on information collected from senior credit officers of all banks and financial institutions extending credit within the UAE.

Interest rates in the UAE have been on the rise in the past couple of years in line with the US Federal Reserve policy due to the dirham peg to the dollar.

Though survey respondents reported that although changes in interest rates have had some degree of a negative impact on credit demand at their institutions, the positive effects of improved housing and financial market outlook, change in incomes, and seasonal influences have more than offset it.

With respect to willingness to lend, survey results revealed a significant increase in appetite to lend to consumers. Looking ahead to the next quarter, banks and finance companies