22% of UAE expats unable to meet loan, credit card payments

Datamonitor research revealed as more banks seen targeting Emiratis as customers.

BANK TARGET: Banks are seen targeting more Emirati customers who are seen as less of a risk for lenders. (Getty Images)

BANK TARGET: Banks are seen targeting more Emirati customers who are seen as less of a risk for lenders. (Getty Images)

More than a fifth of UAE expats were unable to meet loan or credit card payments over the past year, research from Datamonitor has showed.

The level for defaults for UAE nationals was marginally lower at 19.7 percent, compared to 22.1 percent for foreign customers, it was reported on Thursday.

As a result, banks are vying to attract more Emirati customers as better job security and bigger salaries make them less of a credit risk to lenders, UAE daily The National reported.

So-called profiling of customers based on their country of origin and also their credit history is expected to increase as banking checks become more sophisticated in the UAE, the paper added.

“In this market there’s opportunities for different rates based on the profiling of consumers and as banks look to better understand their client base there will be opportunities for increasing profitability going forward,”  said in commRichard Adams, a consulting analyst at Datamonitor said in comments published by the paper.

Although Emiratis have historically chosen to bank with local lenders, both local and international banks are expected to increasingly compete for their services, the paper said.

Some foreign banks are reducing mortgage rates and offering better car loans to attract clients, Janany Vamadeva, a banking analyst at Al-Futtaim HC Securities, told the National.

Some banks were forced to write down debts linked to the thousands of expatriates who left the country after a wave of job losses and a collapse in the country’s property market.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

Posted by: Shaikh Mohammed

Clever move but comes late. This type of banks' policies will give a big helping hand to GCC people in coming up and help them in need. Thanks to all GCC Banks.

Posted by: kelly

How can the Banks in the UAE introduce a 2 tier banking system - lower rates of interest charged depending on what country you are born in is outrageous. Yes I agree the banks need to implement stricter lending controls but introducing their own apartheid system is not the way to do it, we should ALL pay the same rate of interest for a business/commercial/ personal loan, the alternative the banks suggest is deplorable. The Banks have proved yet again they have NOT learned any lessons since 2008.

Posted by: MissDubai

Not that I agree with the banks targetting Emiratis based on AB's article above, but isn't your own analysis a bit skewed as well? I would personally be much more hesitant to lend a large sum of money to someone who struggled to meet day-to-day expenses than someone who borrowed money for a luxury item. After all, who appears to have the best capacity to pay back?

Posted by: Lady Muck

"Neither a borrower nor a lender be" - that quote has come round to hit me a few times in the last couple of months, and while we can all moan at the banks, we have to accept some of the responsibility for our financial situations - while most of us aren't financial experts, putting ourselves further in to debt is just as much our responsibility, in that we know what we have borrowed; we have monthly reminders, we didn't have to take the extra credit card being offered; we chose to do that and since the financial crisis hit, we have had the last year or so to start working on reducing that debt. I made a suggestion before that the Central bank should declare an amnesty on personal debt, so that everyone can get on the same page, and banks need to restructure that debt, to managable and agreeable limits, therefore ensuring that money gets paid in to the system, but that the economy gets revived, as the small cogs that keep it moving can start spending, albeit sensibly. I know that the banking system is no longer working for me or with me, and I have reverted to my grandmothers mode of hiding money in the house, to ensure that if the worst happens, I will still have cash - what is the world coming to when I can no longer trust my bank to keep my money for me, but rather hold me to ransom.

Posted by: Albert Wynn

It is sad and appalling to see that greed is the bearer of the torch in many parts of the world. When bankers and lenders are doing great at the expense of the client with revenue and profits continuing to grow, come and get it is the limit. All types of financial instruments are created to lure in that faithful client. Along with this comes the the following: 1) Remember we understand and we are here to help you; 2) Don't worry we are all about helping our customers and clients with affordable loans; 3) Remember you are in good hands with our great financial team who can help you prepare for the future now; 4) Loans are out business and we take every care to ensure that our customers and clients receive the best treatment, etc., etc. , etc. However, now that markets and economies around the world are in a downturn with a slow, but returning economy, bankers and lenders demanding that customers and clients repay their loans on demand now! They do not remember anything about being their to help you and you family or business. It was all about greed and now greed only promotes more greed. Most of the customers and clients do want to pay back their loans. Some of these companies and individuals have been long standing customers and clients with excellent records of account, but this is not even a consideration. Yet when the economy is doing great, her they are just calling and mailing wanting to know how can they help you. Why don't you come in so we can talk about your needs and how we can help. This is all mistrust on part of the financial institutions. What about the millions of losses they incurred while investing the investments of those same customers and clients. All the banker can say is, well they knew their was risk of loss, so that's that. Now where is the repayment of our loan. We will have you arrested and thrown in jail if you do not pay now. For those bankers and other financial institutions who seek to share in the heartache and pain of their customers and clients who truly want to make arrangements through restructure to repay with help and consideration from the lenders will create a win-win situation and perhaps gain the golden trust factor with clients and customers who will be their for them as loyal and lasting future clients and customers. The financial instutions that take the lead and stand outside the box to rethink there present stand will be the ones to prosper with success in the future.

All comments are subject to approval before appearing

Further reading

Features & Analysis
Startup Academy: How to fund your startup

Startup Academy: How to fund your startup

Debate at the latest Arabian Business Startup Academy revealed...

The UAE is becoming more comfortable telling the world what it is thinking

The UAE is becoming more comfortable telling the world what it is thinking

The story of the country over the past 10 years helps explain...

Trading bricks: The growing popularity of real estate investment trusts in the Gulf

Trading bricks: The growing popularity of real estate investment trusts in the Gulf

Investor interest in real estate investment trusts (REITs) has...

Most Discussed