By Karen Leigh Wednesday, 9 February 2011 4:23 PM.The number of credit card issuances will rise in the UAE in 2011, fuelled by growth in lending and acquisitions and the improving health of the overall economy, financial services firm Dubai First said on Wednesday.
“On the conservative side, we’ll see a seven to ten percent growth in the number of credit cards,” Amit Marwah, senior vice president, Dubai First, told Arabian Business.
His CEO, Ibrahim Al Ansari, said credit lending would rise six to ten percent in the emirate, along with a ten to eleven percent growth in acquisitions and an increased “lending appetite.”
In a signal that the market is stabilizing, First’s rate of payment defaults was down 15 percent in 2010, from the previous year.
There are currently about nine million cards in the UAE market, 3.7 million of them credit. During the credit crisis the number of debit cards issued went up by as much as 500,000, and debit usage increased by 19 percent.
Two years later, institutions and customers are slowly starting to have more confidence in credit.
“All institutions are re-engaged and re-energized and coming back to the [credit] market,” Al Ansar said.
The credit boom days of 2007 and 2008 saw a year-on-year CAGR average of 30 percent. Though it’s unlikely that figure will be reached again – companies such as Dubai First have learned to evaluate appropriate credit limits for customers based on income and net worth – 2011 will see a re-birth of expanded credit for high-income clients, Marwah said.
“We are targeting the high-next sector, the top of the pyramid. We see a lot of growth within the private banking sector,” he said.
In First’s case, a no-limit credit card would be issued to someone whose net worth is at least $10m
But the credit industry will see success from all income levels.
Though First has decided to concentrate on high-income targets, “the card business will make money across all sectors” over the next twelve months, said its chief risk officer, Prabhash Jha.