S&P Affirms Egyptian Banking Sector's Resilience amid Rising Consumer Lending

Standard & Poor's Global expects consumer lending in the UAE to keep growing at 10-12% annually through 2025 and 2026. The growth comes from strong economic activity, population increases, rising employment, and potential interest rate cuts. UAE banks can handle this rapid expansion, even as consumer loans hit over half a trillion dirhams by mid-2025.

Consumer loans in the UAE reached 540.9 billion dirhams by June 2025. That's a massive 55% jump from end-2021 levels, averaging 13.6% annual growth. This growth rate is 2.5 times faster than overall bank lending, which grew just 5.1% annually during the same period.

The UAE's economy has been firing on all cylinders for four years now. Both oil and non-oil sectors are expanding, while important visa reforms have made it easier for people to live and work there. The population grew from 9.6 million in 2021 to 11.2 million in 2024. More people means more demand for mortgages, personal loans, car loans, and credit cards.

Digital lending platforms have made borrowing faster and easier too. Banks can process applications much quicker than before, which keeps the momentum going.

But here's the thing - household debt is climbing. It reached 25.4% of GDP in 2024, up from 20.7% in 2022. When you include business-purpose consumer loans, that number hits 29.7%. Still, this remains lower than similar emerging markets.

The UAE has a big advantage though. GDP per capita sits at $48,000, compared to just $16,000 average in other countries. This higher income makes debt more manageable. Plus, many construction workers in the country can't qualify for bank loans anyway, so the actual debt-to-income ratio for eligible borrowers is probably better than the headline numbers suggest.

S&P expects UAE banks to maintain strong returns on assets between 2.0% and 2.1% over the next 12-24 months. Banks have used their high profits over the past three years to build up reserves, pushing provision coverage above 100% by June 2025.

New credit risk management standards that kicked in late last year should strengthen these buffers even more. The rules require banks to apply supervisory haircuts on collateral when calculating risk mitigation for capital ratios and provisioning purposes.

UAE banks maintain a solid capital adequacy ratio of 17.3% as of June 2025, well above the 10.5% minimum requirement. S&P forecasts GDP growth averaging 4.1% from 2025-2027, driven mainly by non-oil activities. Lower interest rates would provide additional support for consumer lending growth.