By Sarah Townsend
Higher oil prices to drive rebound in lending after 'summer slowdown'
The UAE’s banking sector will see renewed growth in 2018 and remain “fairly robust” into 2019, a new analysis says.
The UAE’s economy overall will benefit from higher oil prices and easing oil production cuts, driving a resurgence in bank lending, according to BMI Research, a Fitch Group company.
Total asset growth and client loans growth both deccelerated in June and July – particularly as a result of Ramadan and the more sluggish economic activity associated with the hot summer months – but confidence is set to return into the autumn, BMI’s latest analysis shows.
It predicts that pent-up demand and an improving economy will see growth strengthen, with total asset growth forecast at 5.2 percent over the next year and client loans growth of 5.5 percent.
Corporates and small businesses are expected to be the primary driver of credit demand over the next 12 months, continuing a trend seen in the previous quarter when business lending outpaced lending to individuals, according to the UAE Central Bank’s latest Credit Sentiment Survey.
The real estate, construction, transport and storage sectors are set to be the primary drivers of economic growth in the UAE over the next year, BMI said.