30/01/2017 11:29 AST
Fewer people in the UAE applied for personal loans during 2016 than in 2015, but those who did apply for personal finance made numerous applications to different banks, according to an analysis from compareit4me.com, the Middle East’s financial comparison site.
Compiling data from its personal loan comparison platform, compareit4me revealed that the number of people applying for personal loans in 2016 decreased by 1.68 per cent over 2015. This generally reflects official statistics showing that UAE loan growth dropped over the course of 2016.
Despite the slowdown in loan growth, there was a 10.26 per cent increase in the number of applications for personal loans from 2015 to 2016, showing that UAE residents eager for finance tended to apply for multiple loans in 2016. This suggests that it was more difficult for UAE residents to obtain personal finance last year.
“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,” said Jon Richards, CEO at compareit4me.com.
“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.”
Despite the decline in the overall number of people applying for personal loans in 2016, one area did see growth. The number of people applying for Islamic personal loans increased by 6.85 per cent from 2015 to 2016. However, with an application growth rate of 17.03 per cent over the course of the year, it is clear that users looking for Islamic personal finance were also forced to apply for multiple products.
“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. What this means for consumers is that you may have to apply for several personal loans before seeing an approval,” added Samer Chehab, COO, compareit4me.com.
In terms of the most popular personal loans of 2016, Emirates NBD’s Salary Transfer Personal Loan for Expatriates was the most applied-for loan last year. This was followed by Dubai Islamic Bank’s Salam Finance product and ADCB’s Simplylife Salary Transfer Loan.
Commercial Bank International’s Personal Loan was the fourth most applied-for personal loan of 2016, with ADIB’s Personal Finance for Expats rounding off the top five.
CPI Financial
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