ABU DHABI: UAE businesses are demanding more loans but lenders appear less willing to supply them, according to a report from the country’s central bank. In its Q1 report, the bank said the appetite for business credit improved from the softening demand seen in the fourth quarter of 2015 but there were ongoing tightening conditions for business loans.
“This was evident in the reported tightening of credit standards pertaining to all the terms and conditions. Survey respondents suggested that the lower oil prices had negative impacts on loan demands across different types of firms, with lenders tightening the credit standards in response to low oil price as well,” the central bank said.
In the survey, 45 per cent of respondents reported increased demand for business loans during the quarter, 16 per cent reported a decrease in demand and 39 per cent reported no change. This resulted in a net balance measure of 13.6 for the quarter, up from -8.1 in Q4 2015.
When asked about the impact of low oil prices on their credit standards, more than 80 per cent of respondents observed a tightening, particularly for small and medium enterprises. In March, The UAE Banks Federation announced plans to help SMEs struggling with debt following a rise in the number of loan defaults.
