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Saudi Banks extend $700 billion Loans in January 2024


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According to official data from the Kingdom’s central bank, Saudi banks extended loans totaling SR2.62 trillion ($700 billion) in January 2024, marking an 11 percent rise from the same month in 2023. The growth in loans was driven by an increase in personal loans, which accounted for 33 percent of the overall growth, while the remaining 67 percent was attributed to the expansion of corporate lending.

Personal Loans and Factors Driving Growth

Personal loans, which include all types of credit provided to individuals, amounted to SR1.25 trillion in January 2024, showing an annual rise of 7 percent. The personal loan market in Saudi Arabia has been experiencing significant growth, driven by several key factors.

One factor contributing to the growth is the demand for residential properties from expatriates entering the Kingdom. Additionally, government initiatives focused on modernizing the financial system have also played a role in the expansion of the personal loan market. The rapid advancement of digitization, resulting in swift lending and approval processes, is another significant contributor to the market’s growth. Furthermore, the growing number of new entrants in the personal finance sector in Saudi Arabia is expected to create lucrative opportunities for further expansion in the near future.

Corporate Lending and Real Estate Activities

Within corporate lending, real estate loans constituted the highest share of corporate activities in January 2024, accounting for 19 percent of the total corporate lending and totaling SR263 billion. This surge in real estate loans can be attributed to Saudi Arabia’s expansive giga-projects, which have mitigated the impact of rising borrowing rates associated with high interest rates.

Other Sectors Experiencing Growth

Apart from real estate, other sectors also experienced significant growth in lending. Wholesale and retail trade accounted for 13.37 percent of corporate lending, amounting to SR183.5 billion, while manufacturing activities made up 12.6 percent of corporate lending, totaling SR172.87 billion.

Vision 2030 and Industrial Growth

Saudi Arabia’s economic transformation under Vision 2030 has been a driving force behind the growth in various sectors, including manufacturing and production. The Kingdom aims to become a global hub for manufacturing and production, with ongoing investments surpassing $1 trillion. Riyadh, the capital city, stands at the forefront of this transformation and boasts the largest manufacturing sector in the Middle East. The city’s momentum is further augmented by a considerable $26 billion government investment directed towards the rapid expansion of the manufacturing sector.

Loans to Professional, Scientific, and Technical Activities

According to Saudi Central Bank data, loans to professional, scientific, and technical activities surged by 56 percent, reaching SR6.25 billion in January 2024, showcasing the highest growth rate among sectors. Education loans closely followed with an annual growth rate of 38 percent, totaling SR6.33 billion, and the information and communication sector experienced significant growth, with loans increasing by 34 percent to reach SR27.6 billion.

Conclusion

The data from January 2024 highlights the significant growth in loans extended by Saudi banks, with personal loans and corporate lending, particularly in real estate activities, driving the overall increase. The expansion of the personal loan market is fueled by factors such as the demand for residential properties, government initiatives, digitization, and the entry of new players in the personal finance sector. The growth in corporate lending is supported by the Kingdom’s giga-projects and the emphasis on sectors like manufacturing and production under Vision 2030.

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