• UAE credit growth seen in high single digits

      November 23, 2017    

    Abu Dhabi: Credit growth in the UAE is poised to hit the high single digits next year, with positive signs emerging and liquidity improving, the UAE Central Bank governor said on Wednesday.

    Speaking at a Middle East Banking Forum in Abu Dhabi, Mubarak Rashed Al Mansouri said that with the credit bureau in the UAE providing better information on borrowers, lending has improved.

    “There’s lots of money, we have a new phenomenon called [a] credit bureau which gives better information [on] borrowers,” Al Mansouri said speaking to reporters on the sidelines of the forum.

    “[The] other phenomenon, we live in an economy and [a] region still linked to oil and until recently the oil price has an effect on the economy in general. However, we see positive signs that this is recovering. We see positive signs on lending and expect it to be in [the] high single digits.”

    Global credit rating agency Moody’s recently said that faster economic growth in 2018 will support the banking system’s credit growth and has forecast credit growth of around 5 per cent in 2018, after forecasting lower growth of around 2 per cent in 2017 — down from 5.8 per cent in 2016 and 8 per cent in 2015.

    Non-oil activity including government spending in Dubai and robust economic activity in trade and financial services is expected to support growth in the UAE economy, alongside the construction of major infrastructure projects in Dubai in preparation for the Expo 2020.

    Al Mansouri also spoke about the growth of the small to medium-sized enterprise (SMEs) sector in the UAE and said the government is keen on supporting the private sector to help diversify the economy.

    “Exposure of our financial sector to SMEs is moderate, this could be improved tremendously provided all stakeholders play their role and coordinate with other stakeholders. What is needed is to have an ecosystem that encourages capital flowing through SMEs.”

    Crowd-funding regulations

    Al Mansouri also said the central bank is looking at crowdfunding regulations to help SMEs, with the objective of licensing crowdfunding platforms. Currently crowdfunding is not licensed by the central bank.

    Asked whether the UAE would follow the lead of the US Fed in hiking interest rates next month, Al Mansouri said the fact that the UAE’s currency was pegged to the dollar meant they had to follow it.

    He added that the margin between the London Interbank Offered Rate (Libor) and the Emirates Interbank Offered Rate (Eibor) has been shrinking, means more liquidity in the system. “Moreover, the UAE is looked [at] as a safe haven where we have seen an increase of non-resident deposits.” On the possibility of more bank mergers, the central bank chief said it is up to the board of directors of the banks to make the decision.

    No impact due to Qatar blockade

    The UAE Central Bank governor also said there had been no impact on the UAE emanating from the Qatar blockade. On the recent circular sent by the central bank to the banks seeking intelligence on some Saudi individuals, the governor said “it was just information gathering, nothing more.”

    Bitcoin

    When asked whether the central bank is framing any new regulations on cryptocurrencies like Bitcoin, Al Mansouri said they were not endorsing it as there are major risks involved with it and it is more of a speculative currency.

    Source>>>

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