Loan growth in the UAE , the second-biggest Arab economy, is set to jump at least 10 per cent this year as an increase in bank deposits drives down borrowing costs, according to Standard & Poor's. Lending will rise 10 per cent or "slightly" more after 9.6 per cent last year, the rating company said. Customer deposits at the UAE's 51 banks rose 11 per cent in the 12 months through September, the most since 2008, central bank data show. That helped send the three-month interbank rate to the lowest since at least 2006, when Bloomberg began collecting data. The UAE , holder of about six per cent of the world's proven oil reserves, is pouring tens of billions of dollars into expanding ports, building airports and developing real estate as Dubai prepares to host the World Expo 2020 and amid an economic diversification plan. Average oil prices of about $100 a barrel last year are also helping support bank deposits. Lending growth "will remain healthy in 2014," Timucin Engin , associate director, financial services ratings at S&P, said by phone from Dubai on Monday. It will be "in line with the strong outlook for retail credit growth and some additional activity in the corporate sector," he said. Dubai's economy is growinghelped by a rebound in tourism, trade and real estate, with growth set to average 4.6 per cent a year between 2012 and 2015, more than twice the rate of the previous four years, according to government forecasts. In November, the emirate won the right to host the World Expo 2020. It will need to invest almost €6 billion ( $8.3 billion ) on infrastructure projects before the six-month fair, Shaikh Ahmed bin Saeed Al Maktoum , head of Dubai's Supreme Fiscal Committee and Chairman and CEO of Emirates airline and group, said. The economy of the UAE , which includes Abu Dhabi and Dubai , contracted 4.8 per cent in 2009 in the wake of the global credit crunch before the growth rate recovered to 3.9 per cent by 2012. Bank lending growth had slowed to between one per cent and four per cent in the four years after 2008, from more than 30 per cent annually in the four preceeding years. "A few sectors are doing well, for example the real estate and hospitality sectors are picking up, while government spending is happening and consumer lending is going to go up," Chiradeep Ghosh , a Bahrain -based senior analyst at Securities & Investment Co , said by phone. While bank lending growth is still below an average of about 11 per cent in the six-nation Gulf Cooperation Council , the rate will jump to 8.4 per cent in 2014 from 2.3 per cent in 2012, International Monetary Fund data shows. The rise in liquidity at UAE banks reflects a gradual recovery of the industry and contrasts with 2008 when the federal government pledged $33 billion to ease funding after credit markets froze. Loan-to-deposit ratios at the country's banks dropped to 92.8 per cent in September from 105.7 per cent in March 2010 , Central Bank data compiled by Bloomberg show. Bank deposits have also been helped by high oil prices and a surge in government deposits. Brent crude has averaged $108.7 a barrel in 2013, 73 per cent higher than the $62.7 a barrel in 2009, according to data compiled by Bloomberg . Government deposits rose 23.9 billion dirhams in the nine months through September, accounting for a quarter of the overall rise, according to central bank data.
Most Popular Stories
- Koch Brothers Step up Anti-Obamacare Campaign
- FDIC Sues Big Banks Over Rate Manipulation
- Vybz Kartel Convicted of Murder
- FDIC Accuses Big Banks of Fraud, Conspiracy
- Stocks Close Lower Ahead of Crimea Vote
- U.S. Consumer Sentiment Falls in Early March
- Ulta Shares Look Good on Strong Q4
- Is Malaysian Airlines Flight 370 in Andaman Sea?
- Jittery Investors Dumping Russian Stocks
- SoCalGas Reaches Record Spend on Diversity Suppliers