The credit rating agency S&P Global has confirmed that consumer loans in the United Arab Emirates (UAE) are experiencing accelerated growth, reflecting robust economic activity, strong employment rates, and a rising population. The agency also predicts that these trends will continue over the next two years, based on a report published recently.
S&P anticipates that the GDP will increase by approximately 4.1% on average between 2025 and 2027, primarily driven by non-oil sectors. This is an upward revision from the previous forecast of 4% made in April.
The current surge in consumer loan demand highlights the strong economic performance in the UAE over the past four years.
This growth has been fueled by advancements in both the oil and non-oil sectors, along with residency visa reforms that provide long-term residency options disconnected from employment contracts. Consequently, the population is projected to grow significantly, reaching 11.2 million by 2024, compared to 9.6 million in 2021.
This demographic shift has boosted the demand for consumer loans, including mortgages, personal loans, auto loans, and credit cards. Additionally, the rapid adoption of digital lending platforms and reduced transaction times have further spurred growth.
The total amount of consumer loans in the UAE reached 540.9 billion dirhams as of June 2025, reflecting a substantial increase of 55% compared to the end of 2021, translating to an average annual growth rate of 13.6%. This figure is more than 2.5 times higher than the overall growth of bank lending, which was 5.1% annually during the same period.
For 2025 and 2026, consumer loans are expected to grow between 10% and 12% annually, with potential further reductions in interest rates contributing to this growth.
Moreover, the GDP per capita in the UAE was reported at $48,000 by the end of 2024, compared to an average of $16,000 in other countries.
As of June 30, 2025, consumer loans accounted for approximately 27% of total bank lending. These loans are typically backed by salary transfers, allowing banks direct access to borrowers’ income sources.
Additionally, the Central Bank has mandated the Union Credit Information Company to provide comprehensive reporting. This company is tasked with collecting detailed data on borrower repayment behaviors, including missed payments for credit cards, personal loans, utility bills, and postpaid mobile services.
This framework enhances banks’ ability to assess and manage risks related to lending to individuals, as any delays or defaults are reflected in borrowers’ credit scores.
The report states: In general, we believe that the risks facing banks in the UAE are manageable and that the banking sector is well-positioned to absorb any potential increases in consumer loan defaults. Banks in the UAE remain profitable, and we expect the return on assets to remain between 2% and 2.1% over the next 12 to 24 months.
This profitability will continue to support banks’ capacity to withstand losses. Moreover, banks have utilized their strong profits over the past three years to build up contingency provisions, leading to coverage ratios exceeding 100% as of June 2025. We anticipate that the implementation of new credit risk management standards introduced late last year will further enhance provision coverage.
These standards require banks to apply a supervisory haircut on collateral when calculating credit risk mitigation values for capital ratio and provisioning purposes. Ultimately, UAE banks maintain a strong capital adequacy ratio of 17.3% as of June 2025, surpassing the required minimum of 10.5%.
Precautionary Measures
Current banking regulations in the UAE impose certain limits and requirements on personal loans. For instance, the maximum debt-to-income ratio is set at 50% of disposable income.
Other examples include caps on mortgage loans, with an inverse relationship between loan-to-value ratios and risks—80% for the first property and 60% for a second property, and so on. Additionally, stress tests are conducted on mortgage loans to assess scenarios involving potential interest rate hikes.
Furthermore, the non-performing loans ratio for the largest 10 banks improved to 3% of their loan portfolios by the end of June 2025, compared to a peak of 6.1% at the end of 2020.
540.9
billion dirhams in consumer loans, representing a 55% increase since the end of 2021.
10 – 12 %
annual growth forecast for consumer loans in the country.
48
thousand dollars per capita GDP versus an average of 16 thousand dollars in other countries.
27 %
share of consumer loans of the total as of June 2025.