Banks operating in the country reduced the provision of individuals of various kinds of loans, including personal loans, credit cards and auto financing, during last April, at a value of four billion dirhams, in the largest monthly decline since 2017, according to data released yesterday by the central bank.
She explained that the cumulative balance of individual loans recorded, at the end of last April, 326.2 billion dirhams, compared to 330.2 billion dirhams at the end of last March.
Banks also reduced their financing to the trade and industry sectors during the same month by 4.1 billion dirhams, as their total financing, by the end of April, amounted to 814.6 billion dirhams, compared to 818.7 billion at the end of March.
During April, banks directed their financing to the public sector companies, granting them loans amounting to 16.4 billion dirhams, for the cumulative balance of this item to reach 217.5 billion dirhams, compared to 201.1 billion dirhams at the end of March, with a monthly growth of approximately 8%.
For his part, Ahmed Hussain, a retail sales official in one of the Islamic banks, said, “There is a wait-and-see approach to lending individuals in sectors that are experiencing job cuts, granting licenses to their employees, or reducing their salaries”, stressing that banks ’risk departments refuse loan requests for such categories Of employees, in addition to the decline in demand by individuals, due to concerns about leaving work or declining income.
Show that most banks currently prefer to buy existing debts to individuals in stable sectors, such as people working in government sectors, and do not mind also granting them financing, but with strong conditions and guarantees.
He added that the interest rates on personal funds also play an important role in the movement of demand, explaining that the rate starts from a fixed 3.48%, and most dealers see that they can take less interest than that, in light of the main interest rate declines, but the banks cannot provide a similar reduction in bank rates Central, as it has to maintain a margin to make profits.
For his part, the banking expert, Amjad Nasr, said that "banks reduced individual financing due to the impact of Corona on jobs, and also reduced the granting of loans to private sector companies that are declining their activity", explaining that "this is a natural approach usually, where the policies of granting credit change according to Market conditions, to maintain funds and to ensure the quality of the loan portfolio and the absence of default. ”
He added that the trend now is to finance government companies and citizens, due to the low risks in lending to them, pointing out that the government and its companies in the health and education sectors have invested large sums during the past two months, in conjunction with the spread of "Covid-19", and this came with the support of banks, so it rose Public sector companies' funds.
Nasr stressed that there is an increase in the levels of liquidity in banks, thanks to the decisions of the Central Bank, noting that the various sectors of the country are likely to return vigorously and recover during a quick period.
Banks reduced their financing to the trade and industry sectors by 4.1 billion dirhams.