As the UAE continues to recover from the effects of the global financial crisis, the days when banks happily issued credit cards, personal loans and mortgages to every customer who walked through the door are long gone.
Instead, the banking industry has entered an era of cautiousness, treading carefully when it comes to lending. However, thanks to new regulations from the Central Bank, some banks are easing borrowing conditions, making it easier for consumers to obtain credit. One such institution is HSBC, which has announced new lending criteria for its credit cards, mortgages and personal loans.
"The market and credit environment in the UAE has improved and we have made changes to our propositions accordingly to ensure our customers can make use of these products for their borrowing needs," says Rick Crossman, HSBC's head of personal financial services.
The new measures include lowering the minimum salary requirement for credit cards and personal loans, to Dh7,500 from Dh15,000, and reducing the minimum deposit for a mortgage to 20 per cent from 25 per cent.
HSBC's new criteria comes three months after the Central Bank issued new retail banking rules covering personal and car loans with limits capping the amount banks can lend to customers at 20 times their salary. The loan repayment period was also set at 48 months - an indication the authorities are trying to strengthen the banking sector by limiting lenders' credit exposure.
Mr Crossman says HSBC's new measures are not a direct result of the Central Bank's rulings.
Rupert Connor, a senior financial consultant at Acuma Wealth Management in Dubai, says HSBC's move signals a change in the market.
"On the whole, the UAE still remains a distressed environment, but the fact HSBC has taken these steps is a good sign," he says.
Other new offers by HSBC include zero per cent interest on credit-card balance transfers for six months and mortgage rates starting at 5.49 per cent.
This is down from the 2010 rate for completed properties of between 6.25 per cent and 6.75 per cent.
"Our revised lending criteria opens these products to a larger number of customers. However, it is important to note that customers will be evaluated individually," says Mr Crossman.
This approach is welcomed by Mr Connor, who says the new criteria is still a far cry from the easy lending conditions of the boom years.
"Though this means a greater number of people are going to have access to consumer lending or at least be considered for it, you are not going to see HSBC open the flood gates to new mortgage applications. Remember, all the banks were burnt very badly not so long ago with their reckless credit offerings, so they are very conscious for this not to happen again."
