Saudi commercial bank assets grew 2.2% in 2017: 2018 promising

September 7, 2018 10:46 am

The Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, has received the 54th annual report of the Saudi Arabian Monetary Authority (SAMA), which reviews the economic and financial developments in the Kingdom of Saudi Arabia during the year 2017, Asharq Al-Awsat reported quoting the Saudi Press Agency (SPA).

Home to an estimated 15.7% of the world’s proven oil reserves and the single largest economy in MENA, Saudi Arabia is a key player not only in the region but also globally.

The report was presented to the King at in Jeddah Wednesday by the Minister of Finance Mohammed Al-Jadaan, SAMA Governor Dr. Ahmed AlKholifey, and SAMA deputy governors.

The Governor mentioned that the Saudi economy witnessed a number of positive indicators.

Most notably, the non-oil sector GDP recorded a positive growth of 1.05%.

The current account registered a surplus of SAR57.1 billion ($15.4bn) in 2017, against a deficit of SAR89.4 billion ($24.13bn) in 2016. Additionally, the banking sector achieved outstanding performance indicators.

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Total assets of commercial banks grew by 2.2% to over SAR2 trillion ($0.54trn).

Bank capital and reserves went up by 6.3% to SAR318 billion ($85.8bn).

The average capital adequacy ratio (Basel Standard) stood at 20.4%, which would support the resilience of the financial sector and its capability to withstand financial crises.

“For many decades Saudi Arabia has built its financial reserves with the proceeds of oil exports, while its increasingly affluent consumers have established the country as a significant importer of goods and services, ” said the Oxford Business Group.

“However, lower oil prices have eroded the Kingdom’s healthy trade surplus, reminding countries around the world of the importance of having a diversified export base. Saudi Arabia’s newly formulated economic strategy aims to do just that, and targets an increase in foreign direct investment inflows to accomplish some of its goals.”

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2018 picture

At the beginning of 2018, a plan was approved to implement the Financial Sector Development Program that is aimed at promoting broad and diversified financial services, building advanced infrastructure, and developing the insurance sector. The program also focuses on developing the capital market through the provision of an efficient platform to encourage investment, diversify investor base, and incentivize savings.

The Governor mentioned that SAMA continuously seeks to develop the infrastructure of payment systems in Saudi Arabia to enable domestic banks to provide comprehensive payment instruments for individuals as well as commercial and public sectors, such as launching a number of significant projects that aimed at enhancing the e-payment infrastructure in Saudi Arabia and stimulating the engagement of the banking system.

Bank lending to the private sector in Saudi Arabia will steadily return to growth in 2018, backed by higher oil prices and increased government spending, the managing director of Saudi British Bank (SABB) told Reuters.

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“Loan growth shrank 1 percent in 2017 – for the first time in at least 11 years – following modest growth of 2 percent in 2016, as companies held back from investment amid concerns over government austerity policies in an era of cheap oil,” said Reuters.

The Saudi banking sector is expected to report a “marginal” rise in topline in the second quarter of 2018, thanks to the improving financial health of small-cap companies and stable provisioning by banks, Al Rajhi Capital said in a new report, as published by Argaam.

“Despite total operating income rising by 0.95 quarter-on-quarter (QoQ) in Q1, 2018, a sharp decline in sequential provisions led to a 17.8% year-on-year (YoY) jump in the sector’s bottom line,” the report noted.

“The sector posted its best-ever quarterly net profit of SAR 12.5 billion ($3.375bn) led by Banque Saudi Fransi, National Commercial Bank and Saudi British Bank,” reported Argaam.

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.