Banks Extend Eight Times More Credit to Individuals Than SMEs
Dubai, UAE – during the first half of the year, UAE banks channeled significantly more lending to individual customers than to small and medium-sized enterprises (SMEs), with financial transfers totaling 11.5 trillion dirhams processed through the central bank system.Of this ample sum, 6.885 trillion dirhams moved between banks, while 4.585 trillion dirhams represented transactions among customers – a disparity highlighting a lending preference for individuals.
This imbalance in credit allocation underscores a persistent challenge for the UAE’s SME sector, vital for economic diversification, wich frequently enough struggles to access capital compared to individual borrowers. The data reveals a broader trend of banks prioritizing lower-risk personal loans and mortgages, despite government initiatives aimed at bolstering SME growth. Banks invested 61.9 billion dirhams in stocks, debt bonds, and other investments during the same period, with a noted preference for government bonds perceived as virtually risk-free.
Further details from the central bank system show 11.3 million checks were cleared using optical image technology, totaling 711 billion dirhams. Central bank withdrawals reached 119.6 billion dirhams, offset by deposits of 104.3 billion dirhams. The preference for government bonds is cited as a key driver for bank investment strategies, contributing to the observed lending imbalance.
