UAE residents found it harder to get loans in 2016 – report

The number of UAE residents applying for personal loans dropped in 2016, but it was harder for those who applied to get their loans approved, according to a new report.

The report by financial comparison site compareit4me.com found that the number of people applying for personal loans in 2016 decreased by 1.68 per cent comapred to 2015.

But despite the slowdown in those taking loans, there was a 10.26 per cent increase in the number of applications for personal loans. Those who applied made numerous applications to different banks.

“This suggests that it was more difficult for UAE residents to obtain personal finance last year,” the report stated.

Jon Richards, CEO at compareit4me.com, said: “This could be seen as evidence for the argument that banks were somewhat less willing to give out credit during 2016. With the liquidity crunch caused, in part, by low oil prices, banks have had to tighten their belts, and a manifestation of that is that normal consumers see less easy access to personal finance.

“On the other side of the coin, with uncertainty in the market, it would appear that UAE consumers are being more careful about taking out credit.

“For 2017, we might expect to see a similar trend. We may see fewer individuals ready to take out personal finance, and those who do want to take out personal loans may find it more difficult to get approvals,” he added.

The report also found that despite a decline in the overall number of people applying for personal loans in 2016, the number of UAE residents applying for Islamic personal loans increased by 6.85 per cent from 2015 to 2016.

With an application growth rate of 17.03 per cent over the course of the year, those looking for Islamic personal finance were also forced to apply for multiple products, the report said.

“This isn’t surprising, to be honest. Islamic banks are facing the same challenges that non-Islamic banks are. With low oil prices permeating almost every aspect of business in the GCC, banks of all kinds are taking a more cautious approach to lending,” said Samer Chehab, COO, compareit4me.com.

“What this means for consumers is that you may have to apply for several personal loans before seeing an approval.”

In terms of the most popular personal loans of 2016, Emirates NBD’s Salary Transfer Personal Loan for Expatriates topped the list, followed by Dubai Islamic Bank’s Salam Finance product, ADCB’s Simplylife Salary Transfer Loan, Commercial Bank International’s Personal Loan and ADIB’s Personal Finance for Expats .

Also read: Emirates NBD expects sharp drop in retail loan growth in 2017