Bank's retail chief says fewer customers are expected to take loans amid disruption caused by UAE credit bureau launch
Mashreq, Dubai's third-largest bank by assets, expects its retail lending growth to slow to 25 percent in 2015 with fewer customers seeking loans and the recently-launched credit bureau taking effect, the lender's head of retail said.
The bank has been aggressively expanding its retail offering in recent quarters, spurred by lending growth that has been above average for the United Arab Emirates banking sector. Retail lending reached 36 percent for the bank last year, compared to 13.8 percent for personal lending in the industry, according to central bank data.
"Our forecast for the industry is that this year will be a slightly slower year than the previous one when it comes to loan offtake, whether it's personal loans or mortgages," said Farhad Irani, head of Mashreq's retail banking group.
The number of customers seeking loans during the first quarter was expected to be "modest", little changed from the previous quarter, he said.
There would also be initial disruption caused by the launch of the new credit bureau which would highlight customers' total borrowings for the first time, making banks more cautious about lending to some segments of society, he said.
Still, the bureau would be beneficial for customers in the long run as those with a clean credit history could command more competitive borrowing rates, he added.
It is the latest Dubai bank to forecast a cooling in lending activity after several years of fast-paced expansion since the economy rebounded from a financial crisis in 2009. Dubai Islamic Bank has cut its total lending growth forecast to between 15 and 20 percent in 2015, down from 32 percent last year.
Prices in the property market - a revenue driver for banks in recent quarters - are expected to dip slightly in 2015 as property sales taxes, stricter mortgage rules and a lack of affordability weigh on market momentum.