Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Saudi bank lending jumps on mortgages, Aramco IPO boosts money supply

Economic IndicatorsJan 30, 2020 09:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Davide Barbuscia

DUBAI (Reuters) - Annual growth in Saudi Arabian bank lending to the private sector rose at its highest pace in years in December, boosted by mortgages, while the proceeds of Saudi Aramco's initial public offering lifted money supply, official data showed.

The world's biggest oil exporter is aiming to boost the private sector and diversify its revenues, but will likely see its growth curbed this year because of sliding oil prices and crude output cuts agreed with OPEC allies.

Bank lending to the private sector grew 7% year-on-year in December, the central bank said this week, the highest annual growth rate since October 2016.

Annual growth in M3 money supply , the broadest money supply measure, jumped 7.1% year on year – the highest in over four years – with some analysts saying the spike was partly due to proceeds coming from the IPO of state oil giant Aramco (SE:2222).

"Money supply is a function of deposits, and we saw an increase of around 73 billion riyals ($19.46 billion) in government and entities deposits in December, which we think has to do with the Aramco IPO," said Mazen al-Sudairi, head of research at Al Rajhi Capital.

Aramco initially raised $25.6 billion, which was itself a record level, in its December IPO by selling 3 billion shares at 32 riyals a share, and sold additional shares this month raising the size of its IPO to a record $29.4 billion.

Private credit growth, partly due to lower interest rates, was boosted by a spike in mortgage lending, with residential new mortgages for individuals provided by banks amounting to 9.3 billion riyals in December - their highest level last year and almost three times their total amount in December 2018.

Contribution from mortgages to private credit growth amounted to 46% at the end of last year, according to Arqaam Capital.

"We expect loan growth to further gain momentum in FY 20e (full year 2020 expected) mainly due to accelerating growth in mortgages," it said in a note this week.

The Saudi government wants to increase activity in the real estate market to revitalize the economy and has taken steps to reform the sector.

Credit sector growth has helped Saudi banks, which saw cumulative profits up 4.8% year on year in December.

Saudi banks have also benefited from an increase in lending to state-backed projects, part of government efforts to boost its non-oil economy. Saudi Arabia's National Commercial Bank posted a 13.2% rise in fourth-quarter net profit this week.

Saudi bank lending jumps on mortgages, Aramco IPO boosts money supply
 

Related Articles

BP boosts dividend, buybacks as profit soars
BP boosts dividend, buybacks as profit soars By Reuters - Aug 03, 2021

By Ron Bousso LONDON (Reuters) -BP boosted its dividend and share buybacks after beating expectations with a $2.8 billion second-quarter profit powered by higher oil prices and...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email