Saudi private sector credit up in Q3

Saudi credit to the private sector maintained its upward trend in the third quarter of 2011 as banks take advantage of a business upturn because of an economic recover, the Gulf kingdom’s largest bank said on Thursday.

Credit to the private sector by the country’s 12 commercial banks grew by around nine per cent y/y, the highest growth since Q1 2009. The upward trend was underpinned by the manufacturing sector that grew by 39.1 per cent Y/Y, National Commercial Bank (NCB) said.

Additionally, the building and construction sector rebounded back to expansion as it reached SR54.2 billion during 3Q2011,” NCB said in its quarterly monetary bulletin sent to 'Emirates24/7'.

Consumer loans grew by 0.8 per cent Q/Q in 3Q2011, the slowest pace since 4Q2010, yet in absolute value it registered around SR227bn, a historical-high. On an annual basis, consumer loans remained around 10 per cent Y/Y growth rate, largely driven by a 26.6 per cent Y/Y growth in real estate finance.

Bank claims on the public sector dropped, from its record high last quarter, to SR207.0 billion, yet growing by 23.9 per cent on an annual basis, the report showed.

Maturing government bonds fell lower to SR48.2bn while treasury bill levels dropped by SAR12 billion to SR158.8bn. “Nevertheless, we still believe the government will continue its issuances to replace maturing government bonds and to absorb ample liquidity from the financial system,” the report said.

It showed money creation marginally decelerated as broad money (M3) grew by 11.9 per cent Y/Y, driven by 10.8 per cent Y/Y increase in total deposits. The growth in total deposits was mainly attributed to demand deposits, which went up by 22.2 per cent Y/Y, thus, maintaining three years of double-digit growth rates.

“Accordingly, the share of demand deposits continued its rise, reaching 57.4 per cent of total deposits, the highest level on record.”

On the other hand, time/saving deposits declined by around 2.9 per cent, the eighth consecutive quarterly drop, NCB said. Quasi-monetary deposits decreased by 1.0 per cent Y/Y, driven by SR7.3bn drop in marginal deposits for letters of credit.

The report showed monetary aggregates have moderated further in Q3 2011, with the monetary base and money supply growing by 11 and 11.9 per cent compared to 15.7 and 13.1 per cent, respectively in Q2 2011.

Currency outside banks reached an all-time high at SR120.7bn, surpassing deposits with SAMA, which lost SAR17.8 billion on a quarterly basis as excess reserves fell to pre-crisis levels to 47.3 per cent.

The report also showed banks’ net foreign assets picked up slightly after a sharp deceleration during the previous quarter while assets due from banks abroad surged by 31.5 per cent Q/Q, reaching SR48.4bn. 

Due from branches abroad plunged by nearly 2.9 per cent over the previous quarter, limiting total assets’ growth to 1.6 per cent Q/Q. The report showed total foreign liabilities grew by a mere 1.3 per cent, which brought net foreign assets to SR115.0 billion, expanding 1.8 per cent.

 

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