Dubai banks expected to boost lending as economy picks up (By IFN)

Dubai banks expected to boost lending as economy picks up

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UAE: As Dubai property prices see a steady gain of 6.2% since 2011 and industries such as trade, tourism and project financing pick up in the emirate, analysts have indicated a rise in risk appetite amongst domestic companies, particularly banks. According to government data, Dubai’s economy saw a 4.1% expansion in 2012, as the number of flights through Dubai Airport rose to 57.7 million, or by 13%. Bloomberg data also showed banks such as Dubai Islamic Bank, Mashreq Bank and Emirates NBD posting higher financing growth, outpacing other banks in the emirate. Development projects have also resumed in the emirate, which following the 2008 property crash, had become somewhat of a ghost town. Figures now point towards growing investor confidence and accelerated project launches, with the emirate’s major property developers Emaar Properties and Nakheel announcing a resumption of housing developments following a surge in demand. As a prudent measure, the Central Bank of UAE had proposed a cap on mortgage lending at the end of last year. However, this was met with pockets of resistance from the financial community, especially bankers, who did not see an end to speculative buying despite the imposition of a cap; and feared a dip in demand in the property market. According to Moody’s, Dubai is expected to see an increase of 5-10% in credit growth this year, after seeing a rise of 2.6% in 2012. However, Saudi Arabia and Qatar are expected to supersede this, following strong credit growth performances of 16% and 27% in 2012.