By Lubna Hamdan
In May RAK Bank capped customers' credit card limits to AED5,000 due to Covid-19-related challenges
One of the UAE’s largest banks has reduced credit card limits for some customers by 95% despite an AED100 billion stimulus package by the Central Bank of the UAE to help ease the financial burdens of the coronavirus-fuelled economic crisis.
Credit card limits for customers of Commercial Bank of Dubai (CBD) were dropped from nearly AED100,000 to AED5,000, according to documents seen by Arabian Business.
The reduction came without notice and customers were told the bank will review its decision in six months.
“When I threatened to leave the bank, they simply said, ‘go ahead, leave the bank, we will not review your situation now,’ one customer told Arabian Business on condition of anonymity.
“I was in the process of getting a mortgage... I assumed I was a valuable customer," said another.
Arabian Business has reached out to CBD for a comment.
The bank reported a 7.3% drop in net profit in Q1 2020 compared to the same period in 2019 and blamed lowered interest rates and weaker business conditions related to the impact of the Covid-19 pandemic.
It is the second bank in the UAE to massively reduce credit card limits, Arabian Business understands.
In May, the National Bank of Ras Al Khaimah (Rakbank) flattened its credit card limit to AED5,000 for some customers as Covid-19 challenges hit the financial institution which reported a 43.2 percent drop in net profit in Q1 2020 at AED153.5 million compared to Q1.
Some of the customers previously had credit limits ranging from AED150,000 to AED36,000.
The UAE’s top 10 banks reported a combined 6.3% quarter-on-quarter drop in interest income, according to an analysis by Alvarez & Marsal (A&M) during Q1 2020.