Consumer loans up 46%

Consumer loans in the UAE surged 46 per cent in the year to June to $14.71 billion (Dh54.03bn), central bank data showed yesterday, as the Emirate struggles to contain inflation.

Outstanding loans to individuals living in the second-largest Arab economy at the end of June 2007 amounted to Dh36.80 billion, the central bank said in a statement on its website.

Personal loans in UAE, home to 4.5 million people, surged almost 40 per cent in 2007 and they have almost doubled in the past four years. Meanwhile, inflation in the world's fifth-largest oil exporter hit an atleast 20-year high of 10.1 per cent in 2007.

Like most of its neighbours in the Gulf, the UAE keeps interest rates low because it tracks US monetary policy. This has pushed real interest rates – the official rate minus inflation – into negative territory, and spurred demand for credit.

Total bank assets advanced to Dh1.43trn in the second quarter, up from Dh1.34trn in the first quarter, the central bank added.