Total consumer loans in the United Arab Emirates grew by almost a third in the first nine months of the year to more than $11 billion, and bank assets rose by more than 20%, the central bank said yesterday.
UAE banks have been expanding their retail lending businesses after a stock market crash in 2006 hit brokerage and fee income and prompted them to push car loans, credit cards and personal loans to 4 million potential consumers.
Banks in the second-largest Arab economy had 41.01 billion dirhams ($11.17 billion) in outstanding loans to individuals on September 30, compared with 31.36 billion at the end of December, the central bank said on its Web site.
"The economy is picking up again after a stock market correction in 2005 and 2006. It is not surprising to see strong growth in consumption," said Giyas Gokkent, head of research at the National Bank of Abu Dhabi.
Data showed total consumer lending has almost doubled in the last four years as the UAE economy surged on a near fivefold increase in oil prices in the last five years, creating more business for local and international lenders.
Total bank assets grew almost 23% to 1.06 trillion dirhams in the nine months to September 30, the central bank said. The UAE, which holds the world's fifth-largest oil reserves, pegs its dirham to the US dollar, forcing it to track American monetary policy to maintain the relative value of its currency.
This has prevented the country from raising interest rates to rein in inflation that hit a 19-year high of 9.3% last year. The UAE, which does not have a benchmark interest rate, cut certificate of deposit rates after US Federal Reserve rate cuts in September and October, but has not fully matched the rate reductions.
UAE Central Bank Governor Sultan Nasser Al-Suweidi said last week he was under mounting social and economic pressure to drop the dollar peg and adopt a basket of currencies including the euro to contain inflation. Bank deposits grew 16.7% in the nine months to 651.49 billion dirhams, the central bank said.