Saudi private sector loans, bank deposits rise modestly

31/03/2011 00:00 AST

Saudi banks' loan growth to the private sector continued to follow cautious course toward recovery in February, rising more than 1 percent from January levels in the largest monthly gain in a year and a half, indicating that efforts to rebuild confidence in the banking sector and engage the private sector are making some headway, Banque Saudi Fransi said in its latest Monetary Indicators released Wednesday.

Private sector loan growth showed its best monthly performance in a year and a half, money supply growth accelerated for a fourth month and deposits grew at their fastest annual pace in more than a year, Saudi Arabian Monetary Agency (SAMA)'s monthly bulletin said, which also showed a slight dip in net foreign assets from record levels a month earlier. Total bank claims on the private sector advanced 6.3 percent in February.

Project financing for larger-scale ventures will be the key catalyst behind the kingdom's credit recovery in the medium term in our perspective. The proportion of loans outstanding in February carrying maturities of three years or longer rose for a fifth month to account for more than 25 percent of total loans. By comparison, long-term loans comprised 21 percent of total loans two years ago, underpinning the shift in focus. Loans maturing in less than one year still account for the largest proportion of total credit, although the ratio has fallen to 58.2 percent in February from about 65 percent two years ago.

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