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Credit demand in the UAE sustained strong growth in 4Q 2024, driven by a positive economic outlook and favorable investment conditions, according to the Central Bank of the UAE’s (CBUAE) 4Q 2024 Credit Sentiment Survey (pdf). The survey, based on responses from 289 senior credit officers at licensed financial institutions across Abu Dhabi, Dubai, and the Northern Emirates, highlights rising credit activity across all emirates and sectors.
Business loan demand increased in 4Q, with 51.9% of respondents reporting higher demand and only 7.1% noting a decline. Dubai saw the strongest growth, while credit demand rose moderately across all emirates. The rise was fueled by higher investment, working capital needs, and strong economic conditions, according to the survey. Interest rates were also a net positive factor for credit demand following recent interest rate cuts.
All sectors witnessed an increase in loan demand, with large firms taking the lead, followed by government-related entities (GREs) and SMEs. The retail and wholesale trade saw the highest growth rate, followed by construction, property development, manufacturing and transport, storage, and communications.
Looking ahead, business credit demand is expected to rise further in early 2025, led by large firms and SMEs.
Personal loan demand continued its steady increase in 4Q, with Northern Emirates taking the lead. Credit cards and housing loans saw the highest demand. Strong economic conditions and rising incomes are expected to drive future demand, particularly for credit cards, housing, personal, and car loans.
New personal loans witnessed a moderate increase across several charges, including
non-interest fees, premiums on riskier loans, and the spread of loan rates over the cost of funds. Meanwhile, credit terms and conditions remained mainly unchanged.
The share of rejected personal loan applications rose during the quarter, due to greater registrations for credit cards, car loans, and housing-related loans. Despite this, financial institutions showed an increased appetite for lending, supported by a strong economic outlook, improved asset quality, and stable borrower creditworthiness.
