Credit to Saudi Arabia’s private sector rose 7.6 per cent year-on-year (y-o-y) in December 2019, which is the highest growth witnessed since past three years, a report said.
The credit growth might be attributed to the lower borrowing cost amid declining interest rates. Further, credit to public sector enterprises grew 14.7 per cent y-o-y, added the latest Saudi Economy Report from Al Rajhi Capital, a leading financial services provider in the kingdom.
Segment-wise credit to the ‘Commerce’ and ‘Others’ increased 2.0 per cent and 14.0 per cent, respectively, which was partially offset by decline in credit to ‘Manufacturing & Processing’ and ‘Building & Construction’ segments by 9.3 per cent and 4.6 per cent, respectively.
Meanwhile, the deposits grew 7.3 per cent, which was mainly driven by ‘Business and Individual’ segment. The banking sector profits jumped 7.4 per cent in December as against the losses witnessed in previous two months. The cumulative banking profits for 2019 rose 4.8 per cent y-o-y. POS transactions continued its robust growth of 25.1 per cent y-o-y, largely attributed to growth in ‘Restaurants and Hotels’, ‘Beverages’ and ‘Transportation’ segments.
Higher digital spending suggests that consumer spending is rising and should contribute to the overall economic growth. The Real Estate Price Index edged up 0.5 per cent y-o-y mainly supported by rise in residential property prices. We believe that higher credit from banks along with likely pick-up in the government spending should support the non-oil economic growth of the Kingdom. This is expected to somewhat offset the impact on oil economy due to ongoing oil production cuts.
Meanwhile, the latest data released by Saudi Arabian Monetary Authority (Sama) indicates that the growth in Saudi Arabian money supply continued its uptrend in December at +7.1 per cent y-o-y, the two key factors for this being mortgage market and Aramco IPO. Growth in foreign reserves turned positive in December increasing 0.6 per cent y-o-y from -0.8 per cent y-o-y in November.
The Index of Industrial Production declined 4.3 per cent m-o-m mainly due to the weak activity in all three sectors namely, ‘Mining and Quarrying’, ‘Manufacturing Industry’ and ‘Electricity and Gas’.
Remittances from Saudi nationals increased 9.5 per cent y-o-y, whereas remittances from non-Saudi nationals rose 2.2 per cent y-o-y. Further, after remaining in the deflationary zone for consecutive eleven months, the inflation turned positive in the month of December, 2019 to +0.3 per cent as compared to -0.1 per cent in the previous month. – TradeArabia News Service
Saudi private sector credit continues uptrend
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