Saudi banks sees 5th month of steady 10% lending growth in October: SAMA 

RIYADH: Saudi banks experienced a 10 percent increase in lending in October 2023, maintaining a consistent year-on-year growth rate for the fifth consecutive month, according to the latest data released by the Kingdom’s central bank.   

Bank lending reached a total of SR2.56 trillion ($680 billion) in October, up from SR2.33 trillion in the same month of the previous year, as revealed by data from the Saudi Central Bank, also known as SAMA. 

While loans granted to individuals still constitute the highest percentage share at 48 percent, totaling SR1.23 trillion, the highest lending growth rates are achieved in the corporate sectors.  

On an annual basis, education loans saw a 65 percent rise in October, reaching SR6.04 billion, while loans for professional, scientific, and technical activities experienced a 40.5 percent increase, totaling SR5.4 billion.    

Just two years ago, these figures stood at SR2.27 billion and SR2.6 billion, highlighting the significant support the country is providing to these industries in line with the Kingdom’s Vision 2030.   

Although residential new mortgages, which are loans provided to individuals for the purpose of purchasing or refinancing residential properties, declined year-on-year, they experienced a 16 percent increase in October compared to September, reaching a total of SR6.77 billion.   

Moreover, nearly 94 percent of lending by Saudi banks takes the form of loans, advances, and overdrafts to the private sector, while 5.68 percent represents credit extended to public sector enterprises.   

Turning to the liabilities side, Saudi banks’ total deposits saw a 9.18 percent growth during this period, amounting to SR2.48 trillion. Among these deposits, 53 percent are demand deposits, and 34 percent are term deposits.   

The recent rise in interest rates in the Kingdom, mirroring the moves by the US Fed as the country’s currency is pegged to the dollar, has prompted Saudis to favor term deposits over demand deposits.  

This shift contributed to the growth of term deposits from SR603.9 billion in October of the previous year to SR841.9 billion in October 2023.  

Consumer behavior

In terms of consumer spending, offering insights into the purchasing behavior of Saudi consumers, there was a 7.24 percent increase in point-of-sales transactions during this period, amounting to SR51.1 billion.  

Saudi Arabia led in expenditure on beverages and food, totaling SR8.5 billion, constituting 16.67 percent of the overall point-of-sale transactions.   

Following closely were restaurants and cafes at SR7.5 billion, and miscellaneous goods and services, encompassing personal care, supplies, maintenance, and cleaning, at SR5.8 billion.  

Notably, the most significant annual growth was observed in spending on public utilities, surging by 36 percent, reaching SR530.77 million in October.  

This pattern underscores Saudi Arabia’s active shift from traditional physical payment methods to digital payments, aligning with its broader initiatives to modernize the economy and enhance financial services.  

Traditional banks are adapting their services to embrace digital banking, offering online and mobile banking solutions. This transition enables customers to manage their finances, make payments, and conduct transactions digitally.  

In line with this transition, data from SAMA revealed the closure of 41 branches and 275 ATMs and the issuance of 5.25 million cards during this period.