The start of the United Arab Emirates’ first consumer credit-rating bureau last week will help banks better deal with bad loans six years after one of the world’s worst property crashes.
“Banks will intensify their analysis of their existing portfolios,” Marwan Ahmad Lutfi, chief executive officer of the Al Etihad Credit Bureau said in an interview in Dubai today. The reports will allow banks to decide how much to lend to their customers, he said.
Loan defaults in the U.A.E., the second-biggest Arab economy, jumped during the credit crisis, peaking last year, as a slowing economy pushed companies to cut thousands of jobs. The ratio of bad loans, or those that have been unpaid for more than 90 days, to combined gross loans at the U.A.E.’s 51 banks was at 8.4 percent at the end of last year, the central bank said in June.
The lack of a bureau has allowed consumers to borrow from multiple banks without the lenders knowing what credit they have from other institutions.
More than 80 percent of the nation’s banks are feeding consumer data covering 98 percent of the market into the bureau’s database, he said.-Bloomberg
