By the end of November 2025, bank lending in the UAE surged by over 370 billion dirhams, showing a 17% increase year-on-year. This represented the highest level of lending activity in the past three years, driven by several factors. Local banking experts pointed out that a key element was the effective management of interest rates, which have had a significant impact recently.
Additional factors contributing to this growth included a substantial number of facilities offered by banks to various borrowing groups, the accessibility of financing programs through digital channels, and outreach to new markets by easing some lending requirements to attract diverse borrower segments.
During this period, the Central Bank implemented consecutive decisions about interest rates, alternating between cuts and maintaining rates in response to actions taken by the US Federal Reserve. According to official data from the Central Bank, the banking sector experienced a gradual decrease in interest rates, which fell by 25% from their peak value.
Specifically, interest rates decreased from an average of 4.9% to 4.65% in November 2024, then to 4.4% at the beginning of 2025. Following a phase of stability, a noticeable reduction occurred before the end of the third quarter, bringing rates down to 4.1%, and further to 3.9% in November.
Lending Activity
According to data on lending activities over the year from November 2024 to November 2025, personal loans for individuals led the way, reaching approximately 80 billion dirhams, accounting for 22% of total new lending, and reflecting a year-on-year growth of 16.5%.
Meanwhile, the industrial and commercial sectors, which include large companies as well as small and medium enterprises, received 59 billion dirhams in new loans, marking a 10% annual increase compared to the cumulative lending amounts for these sectors and individuals as of November 2024.
Local banking expert Ahmed Salem noted that interest rates have been a significant driving factor for lending growth since last year, along with long-term financing options and banks’ ability to reach a wider range of customers and create new markets for loans, particularly through banking channels.
He indicated that the ongoing decrease in interest rates could further expand the lending market specifically for small and medium enterprises, as some personal loans—benefitting the most from interest rate cuts—are being utilized to establish personal businesses and projects.
This shift has led to an increased share of this category in the borrowing landscape compared to typical personal loans, which primarily finance car purchases and credit cards. These types of financing have seen notable rises in light of borrowers’ perceptions of favorable timing and changes in suitable interest rates for borrowing decisions.
Additionally, there are numerous market factors aiding demand growth, including an increase in the segments eligible for personal borrowing and improved creditworthiness among borrowers. Greater lending activity is expected if further rate cuts occur or if rates remain stable at their lowered levels throughout the year.
17%
Growth in lending over 12 months
80
Billion in new loans for individuals with a growth of 16.5%
10%
Growth in lending for the commercial and industrial sector