Two bankers: contribute to the growth of banks' profits and the return on deposits
Raising the interest on real estate loans on the first of October..No increase on “personal finance”
Banks increased interest on personal loans last August by 1%.
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According to information collected by "Emirates Today", yesterday, that banks will not make changes to financing rates or interest on personal loans, as they raised them during last August, up to 1%, while the system is being updated for real estate financing, as interest is expected to rise. For the same, starting from the first of next October, and not now, given that this type of financing is linked to the EIBOR price, which yesterday witnessed an increase in the same percentage raised by the Central Bank.
Two bankers said that raising the main interest, which took place the day before yesterday, would raise the interest on EIBOR-related finances, such as real estate finance and inter-bank loans, but in return, it would be in the interest of increasing banks’ profits, as well as raising the return on bank deposits. .
They stressed that pegging the dirham to the dollar greatly benefited the local currency, helped in its stability, and protected it from high fluctuations.
Yesterday evening, the Central Bank of the country raised the main interest rate by 75 basis points, equivalent to 0.75%, in conjunction with a similar decision announced by the US Federal Reserve, due to the policy of linking the dirham to the dollar.
The “base rate” on overnight deposit facilities was raised by 75 basis points from 2.4% to 3.15%, as of yesterday.
The Central Bank also decided to keep the rate applicable to borrowing short-term liquidity from the Central Bank through all existing credit facilities at 50 basis points above the base rate.
It is noteworthy that the policy of the fixed peg of the exchange rate of the dirham against the US dollar in the foreseeable future has reduced the degree of uncertainty resulting from the fluctuation of the exchange rate in countries that follow different systems.
strong feature
For his part, the banking expert, Ahmed Youssef, said: “We are an oil-exporting country, and it is natural that our currency is linked to the dollar, and this has benefited the dirham a lot over the past decades, as it remained stable and protected from fluctuations, in addition to this peg giving the dirham a strong advantage, represented in In its high purchasing power, especially against other currencies, given the dollar’s being the global peg currency, in addition to its recent rise.”
He added that "the strong dirham imposed itself in many transactions, whether those related to exchanges with China or Russia's recent decision, to adopt it as a base currency for trade transactions and payments, reflecting the strength of the local currency, which is the most important element of monetary and fiscal policy."
And he indicated that "raising the interest undoubtedly increases the profitability of the banks, and also raises the return on bank deposits."
Set commitments
For her part, the banking expert, Awatef Al-Harmoudi, said, “Customers now have the ability to control their bank obligations, and not to borrow except for necessity, but on the other hand, and over the course of the major interest hikes during the current year, we did not witness a significant negative impact on the granting movement. On the contrary, the financial statements of the banks for the first half showed an increase in the credit portfolio, which means an increase in the number of borrowers.” To study their financial situation well, before taking any financing, to ensure that they are able to pay.”
She pointed out that "raising interest gives banks a higher profit margin, as well as for the return on deposits, so it is good for individuals who have excess money to invest at this time by depositing their money in banks."
It is noteworthy that the dollar accounts for more than 70% of the total UAE trade with the outside world, especially oil.
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