The UAE posted strong growth in lending to both individuals and corporations in the second quarter of 2023 despite rising interest rates, according to a central bank survey.
The Central Bank of the UAE's credit sentiment survey found that demand for personal loans remained high in April-June, driven by growth in mortgages, vehicle loans and credit cards. The survey measure for individual lending touched its highest level since 2014.
The survey also showed solid demand for corporate loans, though the pace was more modest for non-residents. Respondents expected strong loan demand and supply conditions to continue into the third quarter for both personal and business lending.
While rising interest rates had some negative impact on credit demand, other factors like the economic and property market outlook, sales growth and investment outweighed the effect of higher rates, the survey found.
The central bank said that improved housing and financial market conditions as well as higher incomes contributed to the growth in personal loan demand. Meanwhile, increased demand for business loans was influenced by economic factors that offset the impact of higher interest rates.
Overall, the survey results indicate the underlying strength of the UAE economy despite challenges like rising rates. Islamic finance saw the strongest growth in personal lending, while corporate lending expanded across different segments.
