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The number of UAE consumers applying for Islamic banking products has declined since last year, according to a new study from yallacompare, the Middle East comparison website.
Yallacompare data revealed during the first half of 2017 10.5 percent fewer people applied for Islamic banking products than in the first half of 2016.
It said in a statement that this is down to a significant lull in demand for both Islamic car finance and Islamic personal finance.
In the first half of 2017, 34.6 percent fewer people applied for Islamic car finance, compared to the first half of 2016, while the number of applicants for Islamic personal finance dropped by 22.41 percent during the same period.
“Over the past year, conventional banks have taken a significant share of consumer attention for personal loans and car loans," said Samer Chehab, COO of yallacompare.
He said there was a 65.7 percent year-on-year increase in the number of people applying for conventional car loans in the first half of 2017, and a 35.1 percent increase in the number of people applying for conventional personal loans during the same period.
Chehab added: “This is a relatively recent development. A previous yallacompare study found that, between 2015 and 2016, the number of users applying for Islamic car finance increased by 64.79 percent to the point that, by the end of 2016, 45 percent of all car loan applications were allocated to Islamic banks.”
However, the data also suggested that Islamic banks are beginning to steal some market share back during 2017, particularly in the car finance space.
Between Q1 2017 and Q2 this year, the number of people applying for Islamic car finance products increased by over 145 percent.
And despite a lull in demand for Islamic personal finance and car finance, UAE consumers have begun gravitating towards credit cards from Islamic banks.
During the first half of 2017, there was a 46.7 percent increase in the number of people applying for Islamic credit cards compared to the first half of 2016.
Chehab said: “As the UAE economy continues to successfully diversify away from oil, and as business confidence picks up ahead of Expo 2020, we expect Islamic banks to renew their focus on personal finance. We are already seeing the beginnings of these strategies in the growing popularity of Islamic credit cards, another form of unsecured finance.”
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