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29 March 2024

UAE bank credit growth to be flat this year: Al Ghurair

Gulf Finance Corp, a wholly owned unit of Dubai's Shuaa Capital, plans to raise up to Dh600 million ($163 million) in syndicated loans this year. (Supplied)

Published
By Waheed Abbas (Within inputs from Reuters)

Credit growth in the UAE is expected to be flat this year, said Abdul Aziz Al Ghurair, CEO of Mashreq bank and chairman of UAE Banks Federation.

“Credit growth will be flattish this year at around 2-3 per cent. It is flattish because we’re used to 10-15 per cent growth in previous years,” Al Ghurair said.

UAE Central Bank said credit growth slowed further in the second quarter in the UAE.

In its quarterly credit sentiment survey, the net balance measure for business lending - the weighted percentage of respondents reporting an increase in demand for loans minus those reporting a fall in demand - dropped to 5.9 from 13.6 in the first quarter and 29.6 in the last quarter of 2014.

Respondents' expectations for the quarter ahead also moderated, with the net balance measure for expectations falling to 13.9 from 24.6 a quarter ago and 33.3 two quarters previously.

UAE Central Bank data showed that the banking lending in the UAE recorded eight per cent growth last year.

Forecasting 10 per cent net profit growth of UAE banking industry, the banking federation chief predicted that the growth will come from declining impairment.

Al Ghurair was speaking to media after a press conference organised by the Mashreq bank to announce integration of Emirates ID with all its bank processes, allowing customers to open accounts, pay their utility bills, carry out cash withdrawals and deposits, update their personal information using the UAE identification card.

Commenting on how the UAE banks can benefit from the Iranian nuclear deal with the world powers, Al Ghurair said local lenders can tap trade finance in UAE-Iran economic ties in post-sanction period.

Addressing the media on the sidelines of a press conference, Al Ghurair said they’re still waiting for more details about the removal of sanctions on Iran after the nuclear deal.

Replying to a question about starting retail operations in Iran, he said the latest trend in the global banking industry is that the lenders are increasingly looking at local markets as they know is better and there’s more competition in the foreign markets.

Analysts at Bank of America-Merrill Lynch and Mubasher Trade earlier this week said that the UAE’s banking and finance sector will be one of the biggest beneficiaries of the Iranian nuclear deal with the world powers.

“We believe UAE banks which have a wide network in terms of branches will play a major role for Iran imports and exports despite the previous three years of sanctions. We see Abu Dhabi Commercial Bank, Dubai Islamic Bank and Abu Dhabi Islamic Bank as the most benefiting stocks once the Iranian trade is revived in addition to any marine terminal and logistics operators, specifically DP World,” said Mubasher Trade Economist Mariam Kamel and Strategist Ahmed Abd Elnaby.

“The UAE is a major winner in terms of trade and inflows. In the UAE, we believe banks and marine terminal and logistics operators should benefit the most. Nine of our 20-constituent UAE Favourite List are financials stocks,” Mubasher Trade analysts in their note on Mena Strategy equities.