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Lending Increased to Saudi Arabia’s Private Sector

Saudi Arabia : 31 July 2010

Saudi banks recorded a boost in lending this June, recording their biggest gain over one month since August 2009 and nearly the highest gain since late in 2008, as shown by recent data from Jadwa Investment out of Riyadh.

June saw private sector lending rise by 0.9 per cent.

This sustained increase indicates that the banks have a growing confidence in the future of local business clients due to the rising economy, according to Paul Gamble, a research head at Jadwa.

Data showed that deposits also increased and at a faster pace than lending, resulting in larger bank reserves.  Lending as a percentage of total deposits actually decreased.

Jadwa reported that import and non-oil related exports for May also increased and are approaching the amounts recorded before the global economic fallout.

In non-oil exports petrochemicals are still the strongest, but plastic exports from January to May of this year were almost twice what they were over that same time in 2009.

According to Jadwa new data also indicates a stronger Saudi economic climate, such as a rise in point of sale business of 44 per cent and a 14 per cent increase in ATM withdrawals of cash.

May saw the inflation rise to 5.5 per cent, a one-year high caused mainly by the 6.2 per cent increase in food prices.

The stock market in Saudi Arabia (TASI) went up 3 per cent throughout July, even many area businesses reported lackluster results for the first half of the year.

Jadwa reported that the positive performance of the TASI was negated by the fact that it had fallen behind most of its peers around the globe.

Saudi BinLaden Group issued a sukuk in July which was well received by investors.  This was the third sukuk issued in Saudi Arabia this year even though there are no trades yet recorded in the third Saudi Electric Company sukuk listed in May.

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