Lending to small businesses and individuals slowed in the second quarter. Paulo Vecina / The National
Lending to small businesses and individuals slowed in the second quarter. Paulo Vecina / The National

UAE business credit growth slowed in Q2, says Central Bank



UAE banks were less willing to extend loans to corporations and small businesses during the second quarter of the year compared with the first, according to the central bank’s quarterly credit sentiment ­survey.

Lenders were also hesitant about giving loans to individuals, but at the same time demand for loans eased across the board amid a slowdown in economic growth.

That trend is expected to continue after a recovery in the first quarter and comes despite a rebound in oil prices this year, the central bank said.

“The ongoing tightening of credit conditions for corporate and small businesses is likely due to the reduced willingness to extend business loans among financial institutions, reflecting a reversion of conditions towards a slower growth path,” the central bank said yesterday.

The bank’s net balance measure in aggregate for business loans was +3.1 in the quarter that ended June compared with +13.6 in the quarter that ended in March. Any reading above zero indicates growth.

Much of the decline came from Dubai, where banks were least willing to lend to small- and medium-sized businesses. The woes facing small business owners began to appear in earnest last year as the price of oil took a nosedive, losing more than 70 per cent of its value from its peak in mid-2014.

Abdulaziz Al Ghurair, the chairman of the UAE Banks Federation and chief executive of the Dubai-based lender Mashreq, warned in November that a number of small business owners may have skipped town, leaving about Dh5 billion worth of unsettled loans.

In May, however, he said that some of the impact of that fallout had been contained. Still, that has not meant that SMEs are finding it that much easier to tap debt.

According to the results of a survey released in May by the Dubai-based Gulf Finance, SMEs continued to feel the pinch in the first quarter as the economy slowed, with payment collection and securing finance remaining difficult.

mkassem@thenational.ae

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COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

Company%20Profile
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Cricket World Cup League 2

UAE squad

Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind

Fixtures

Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE

if you go

The flights

Fly to Rome with Etihad (www.etihad.ae) or Emirates (www.emirates.com) from Dh2,480 return including taxes. The flight takes six hours. Fly from Rome to Trapani with Ryanair (www.ryanair.com) from Dh420 return including taxes. The flight takes one hour 10 minutes. 

The hotels 

The author recommends the following hotels for this itinerary. In Trapani, Ai Lumi (www.ailumi.it); in Marsala, Viacolvento (www.viacolventomarsala.it); and in Marsala Del Vallo, the Meliaresort Dimore Storiche (www.meliaresort.it).

COMPANY PROFILE

Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed