|01-25-2015, 02:47 PM||#1|
UAE credit demand slows in Q4, better appetite expected in Q1
A survey by the United Arab Emirates (UAE) Central Bank showed business demand for credit in the fourth quarter eased a bit but maintained its strength and is expected to be sustained in this quarter.
The credit sentiment survey, which was unfolded in the first quarter of 2014, collects information from all lenders in the UAE, and the central bank is now publishing the data every quarter.
The net balance gauge for business credit demand declined to 29.7 in the three-month period to December 31 from 33.6 in the previous quarter, with the slower growth coming from the Northern Emirates and Abu Dhabi.
The measure is the weighted percentage of lenders who reported increased loan demand minus those who reported lower credit demand.
However, most of the respondents are expecting higher business credit appetite in the first quarter, with most expectations relying on strong growth in Dubai.
The decline in demand could be owed to weakened resolve in many industries, mainly construction and property development.
Home prices in the UAE and mainly Dubai continued to rise in 2014, but at a much slower rate than in 2013 after the central bank added mortgage restrictions and the government doubled a transaction tax.
The central bank said fourth-quarter growth in credit demand weakened as small-and-medium enterprises (SMEs), together with government-related companies reduced their borrowing.
Lower oil prices did not do much to help sentiment as well. Although lending conditions are not affected by lower oil prices, it could hamper the rate of expenditure growth and its outlook in the UAE.
Credit demand growth is expected to be stronger this quarter, but slower than the first three quarters of 2014.
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