By Daliah Merzaban
Lending touches $13.18bn in three months to March 31 as Gulf state mirrors US rates cuts.
Consumer loans in the UAE soared almost 47% in the year to March as the second-largest Arab economy slashed interest rates in line with the US, central bank data showed on Sunday.
Consumer lending in the UAE has doubled in the last four years, during which time oil prices have risen almost six-fold, helping drive economies in the world's biggest oil-exporting region.
Loans to individuals in the world's fifth-largest oil exporter rose to 48.41 billion dirhams ($13.18 billion) on March 31, compared with 32.95 billion dirhams a year earlier, the UAE central bank said on its website.
Outstanding consumer loans rose 11.4% in the first quarter, with an addition of 4.95 billion dirhams of outstanding loans in the three-month period, the data showed.
Like other Gulf states, the UAE pegs its dirham to the dollar and has tracked seven rate cuts by the US Federal Reserve totalling 3.25% since September 18. Banks have reduced some borrowing costs to reflect the monetary easing.
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The peg has prevented the UAE from raising interest rates to rein in inflation that hit a 19-year high of 9.3% in 2006 and probably accelerated to 11.4% last year, according to the average forecast of economists in a poll by newswire Reuters this month.
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Real interest rates in the UAE - which reflect the official rates charged by banks minus inflation - are negative, spurring demand for credit.
Emirates NBD, the largest Gulf Arab lender by assets, last week said first-quarter profit jumped 36.8% as corporate and retail lending surged on low interest rates.
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Total bank assets grew 45% to 1.34 trillion dirhams in the year to March, the central bank said. Bank deposits were 773.59 billion dirhams at the end of March, up 7.4% from the end of December. (Reuters)