Growth in credit demand in the UAE moderated on a q-o-q basis in 2Q 2025, but remained in the positive territory, largely supported by robust economic conditions, higher household incomes, and an encouraging investment climate, according to the Central Bank of the UAE’s (CBUAE) 2Q 2025 Credit Sentiment Survey (pdf). The survey, based on 259 responses from senior credit officers at licensed financial institutions across Abu Dhabi, Dubai, and the Northern Emirates, underscored rising credit activity across all emirates.

Business loan demand continued to grow, though at a slower pace, with 47.9% of respondents reporting an increase in demand. Dubai saw the strongest demand for business loans, followed by Abu Dhabi and the Northern Emirates. The growth was supported by “stronger economic conditions as well as high working capital requirements, resilient investment, and high government expenditure,” according to the report. Interest rates were also a key driver of credit demand during the quarter.

Lending was also steady on the back of “improving bank asset quality, stable borrower creditworthiness, and a higher risk tolerance,” the report said.

ICYMI- The CBUAE decided in July to hold interest rates steady for the fifth time in a row, following in the footsteps of the US Federal Reserve. The base rate applicable to the overnight deposit facility remains at 4.4%, while the rate applicable to borrowing short-term liquidity was kept at 50 bps above the base rate for all standing credit facilities.

Expansion extended across all segments: Large firms posted the highest net balance, followed by SMEs and government-related entities (GREs). The property development sector saw the strongest growth in credit demand, followed by retail and wholesale trade, construction, and manufacturing.

The road ahead: Growth in business credit demand is expected to strengthen moderately in 3Q 2025, led by the construction, retail and wholesale trade, manufacturing, transport, storage & communications, and property development sectors.

Personal loan demand also posted steady growth in the 2Q but eased compared to the previous quarter, with Abu Dhabi taking the lead, boosted by strong economic conditions and higher household incomes. Demand for credit cards, housing loans (for owner-occupiers), car loans, and other personal loans saw the biggest increases during the period. Meanwhile, “financial institutions’ lending appetite was supported by a solid economic outlook, strong competition from other banks and financial institutions, improving bank asset quality and stable borrower creditworthiness,” according to the survey.

Looking ahead to 3Q, expectations are that both demand and supply of personal credit will increase, suggesting a positive outlook for personal credit conditions.

Credit standard mixed: Premiums on riskier loans increased during the quarter, while adjustments to LTV/LTI ratios and non-interest fees and charges for personal loans recorded a small uptick.

The share of rejected personal loan applications grew at a moderate pace during the quarter, with a higher rejection rate recorded for car loans more than offsetting the decrease in credit card rejections.

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