Banks are offering higher interest rates to attract deposits, while at least one lender has taken measures that appear to be aimed at trimming retail loans, according to analysts.
The move comes as local banks struggle to maintain large loan portfolios amid a credit crunch that has made it difficult for banks to find short-term funding. Banks increased their lending dramatically over the past year, with loans growing 49 per cent in June from a year earlier. Deposits, meanwhile, increased only by 36 per cent, according to Shuaa Capital, a Dubai-based investment bank.
Before the liquidity squeeze hit, banks filled the gap between loans and deposits by selling bonds to raise cash. Most of these bonds were purchased by foreign investors. Now, foreign appetite for debt has dried up, forcing local banks to look to their customers for extra cash. The three month Emirates Interbank Offer Rate (Eibor), the interest rate banks charge each other for loans, climbed to 4.70625. That is more than double its rate less than six months ago.
According to Sofia El Boury, an analyst at Shuaa Capital, over the past few weeks some banks have started to raise interest rates on customers' fixed deposits. They may also become more cautious when it comes to making new loans, she said.
"It's an effect of the liquidity shortfall. Raising interest rates is one way banks are trying to attract more deposits. And it might work, especially if people begin to view the property market as less than a surefire win," said Andrew Gilmour, an economist at the Samba Financial Group.
Emirates NBD, the country's largest bank by assets, launched a campaign yesterday designed to encourage responsible borrowing among its retail customers, which could reduce the amount of loans it issues. Both Emirates Bank and National Bank of Dubai also recently began offering higher promotional rates for consumers willing to deposit money with the banks for one year or longer.
In July, Emirates NBD held Dh187 billion in customer loans, compared to Dh157bn in customer deposits. The bank declined to comment.
By offering special incentives to anyone willing to deposit money for a fixed period ? anywhere from one week to several years ? they are hoping to raise extra cash they can lend against. Emirates Bank is offering customers a 4.5 per cent return if they deposit Dh100,000 for six months, and five per cent interest if they deposit for one year. The National Bank of Dubai is offering six per cent interest on deposits larger than US$50,000 for one year or longer. Both offers began during the past few weeks, and will expire before the end of the year.
tpantin@thenational.ae
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
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THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
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BLACKBERRY
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The results of the first round are as follows:
Qais Saied (Independent): 18.4 per cent
Nabil Karoui (Qalb Tounes): 15.58 per cent
Abdelfattah Mourou (Ennahdha party): 12.88 per cent
Abdelkarim Zbidi (two-time defence minister backed by Nidaa Tounes party): 10.7 per cent
Youssef Chahed (former prime minister, leader of Long Live Tunisia): 7.3 per cent
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
On sale: now
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
RESULTS
Welterweight
Tohir Zhuraev (TJK) beat Mostafa Radi (PAL)
(Unanimous points decision)
Catchweight 75kg
Anas Siraj Mounir (MAR) beat Leandro Martins (BRA)
(Second round knockout)
Flyweight (female)
Manon Fiorot (FRA) beat Corinne Laframboise (CAN)
(RSC in third round)
Featherweight
Bogdan Kirilenko (UZB) beat Ahmed Al Darmaki
(Disqualification)
Lightweight
Izzedine Al Derabani (JOR) beat Rey Nacionales (PHI)
(Unanimous points)
Featherweight
Yousef Al Housani (UAE) beat Mohamed Fargan (IND)
(TKO first round)
Catchweight 69kg
Jung Han-gook (KOR) beat Max Lima (BRA)
(First round submission by foot-lock)
Catchweight 71kg
Usman Nurmogamedov (RUS) beat Jerry Kvarnstrom (FIN)
(TKO round 1).
Featherweight title (5 rounds)
Lee Do-gyeom (KOR) v Alexandru Chitoran (ROU)
(TKO round 1).
Lightweight title (5 rounds)
Bruno Machado (BRA) beat Mike Santiago (USA)
(RSC round 2).
MATCH INFO
Manchester United 2 (Heaton (og) 42', Lindelof 64')
Aston Villa 2 (Grealish 11', Mings 66')