Saudi Gazette report

Riyadh — Personal wealth in Saudi Arabia is projected to accelerate at a Compound Annual Growth Rate (CAGR) of 5% and expected to reach $1.1 trillion in investible assets by 2022, according to a new report.

Personal wealth in Saudi Arabia has grown at 3% between 2016 and 2017, said the Boston Consulting Group (BCG), Global Wealth 2018: Seizing the Analytics Advantage.

From 2016 to 2017, private wealth was driven primarily by the positive development of offshore assets.

The report, BCG’s 18th annual study of the global wealth management industry, uses global and regional perspectives to examine such topics as the evolution of personal financial wealth, the widening revenue gap and how institutions can narrow it, and the state of offshore business.

The report also takes a comprehensive look at a critical initiative for staying competitive in the marketplace: unleashing the power of advanced analytics.

“Taking an in-depth look at wealth distribution, both investible and non-investible assets in Saudi Arabia are expected to grow at a steady pace.

Investible assets will grow at a CAGR of 6% and non-investible assets will grow at a CAGR of 5% in the next five years,” said Markus Massi, Senior Partner & Managing Director of BCG Middle East’s Financial Services practice.

“When it comes to asset allocation, offshore assets, at 49%, were the highest proportion of assets in Saudi Arabia in 2017, followed by currency and deposits at 26%, equities and investment funds at 19%, and life insurance and pensions at 6%. For the most part, this asset allocation is expected to experience slight growth by 2022, with offshore assets, currency and deposits, and equities and investment funds projected to reach 50%, 26% and 18% respectively,” Massi added.

At 5%, offshore assets drove growth by asset class between 2016 and 2017 in Saudi Arabia. Other drivers of asset class growth included insurance and pensions at 4%, and equities and investment funds at 3%. While bonds experienced a significant global decline of -10%, in Saudi Arabia, bonds did not experience any movement in the 2016 to 2017 period.

Looking to the future, growth by asset class will pick up slightly in life insurance and pensions at CAGR of 6%, and currency and deposits at a CAGR of 5% over the next five years. In the same period, other asset classes will remain constant including offshore assets at CAGR 5%, and equities and investment funds at CAGR 3%.

Offshore share is expected to grow steadily over the next five years at a CAGR of 5% to reach $10 trillion in Saudi Arabia.