RIYADH – Saudi banks are lending the most in at least five years as the government’s plan to invest $500 billion in new housing, infrastructure and industry boosts confidence in the Kingdom’s economy.
Bank credit climbed 13 percent in the 12 months ending in May to SR868 billion, central bank data showed.
Ten of 11 publicly-traded banks reported raising the value of their loan portfolios in the first six months.
"Bank lending to the private sector will increase by 14 percent this year," Paul Gamble, economist at Jadwa Investment said. "Strong economic-growth prospects have reassured banks about the lending environment and spurred demand for credit."
The governtment’s spending plan, which is based on a forecast that the Kingdom needs to build 1.25 million new homes by 2014, encouraged banks to arrange a record $7.9 billion of syndicated loans in 2012.
Alinma Bank posted the largest increase in loans with a jump of 33 percent, while Al Rajhi Bank, the biggest lender by market value, reported a 23 percent gain.
The Kingdom’s economy is forecast to expand 4.8 percent this year, second-fastest pace in the GCC after Qatar.
"In terms of earnings, the driving factor has been revenue growth," Murad Ansari, Riyadh-based analyst at investment bank EFG-Hermes Holding SAE, said. "Loan growth is contributing to fee income, while provisioning costs have also appeared to have largely stabilized." – Agencies