27 March 2017
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UAE credit card spending

Credit card spending up in Jan-Feb 2017


By Emirates NBD Research



Card spending up 11.8% in Jan-Feb 2017

Credit card spending in the UAE was 11.8% higher in Jan-Feb 2017 compared with the previous year, according to data compiled by Network International. Network International covers about 60% of the UAE market for e-commerce and point of sale (POS) transactions. 

Most of the growth in spending in the first two months of 2017 was on cards issued by UAE banks (mainly residents), which rose 12.6% y/y and accounted for 74.2% of total POS transactions. Foreign spending (i.e. on cards issued by non-UAE banks) also increased 9.4% y/y for the same period. We note that the growth in residents’ spending was faster than the -7.8% y/y decline recorded in the same period last year.  

Spending on US-issued cards accounted for 21.5% of all foreign spending in the UAE in Jan-Feb 2017, and was up 14.8% y/y. Saudis are the second biggest foreign spenders in the UAE, accounting for 14.6% of total non-UAE POS transactions. Growth in spending on Saudi-issued cards was up 7.1% y/y in Jan-Feb. The British are third, accounting for 9.8% of foreign sales in Jan-Feb with growth in spending slightly down -0.6% y/y, due to the relative weakness of GBP against USD. 

Spending by sector

Total spending was partly supported by the easing of visa rules for Chinese nationals in Q4 2016 with the number of Chinese visitors to Dubai growing 20.0% y/y in 2016. Russian visitors also grew by 13.7% y/y in 2016 with the 30.0% appreciation in RUB/USD over the last year had likely contributed to the recovery in the number of visitors from Russia during the course of 2016. The UAE government’s recent announcement that Russians will now also be able to get visas on arrival in the UAE should further support demand in this market going forward.

In terms of overall spending by sector, duty free sales enjoyed the highest spending growth for the first two months of 2017, up by 20.2% y/y accounting for 10.0% of total card spending. UAE residents increased spending on duty free 17.1% y/y while foreign spending on duty free was also up 21.3% y/y for the same period.

Clothing & boutiques, jewellery & watch and restaurant spending also enjoyed double-digit growth of 16.0%, 15.9% and 14.6% y/y in Jan-Feb 2017, respectively. The strong USD remains a headwind to Dubai’s hospitality sector despite the 1.6% increase in total credit card spending on hotels with hotel spending on foreign cards up roughly 2.0% y/y in the first two months of 2017. We note that the lower card spending on hotels may be due to reduced rates rather than just lower volumes, as hotels have discounted room rates in order to keep occupancy levels high. 

Russian spending increased by 81.2% for jewellery & watches, 79.8% for duty free sales, 69.1% on restaurants and 63.1% for hotels in Jan-Feb 2017 reflecting the appreciation of the ruble against the dirham. To some extent, the overall increase in Russian spending was matched by higher Chinese and Qatari spending. 

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Emirates NBD Research Research Analyst

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