Banking
From The Report: Saudi Arabia 2015
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Having posted another year of positive results, Saudi Arabia’s banking sector is positioning itself to take advantage of the government’s expansionist fiscal policy and the large number of projects this has created. In the meantime, opportunities in other areas of the lending landscape are being explored, most notably among the nation’s smaller businesses. An ongoing process of regulatory reform and intense competition continue to present challenges to the Kingdom’s banks, but the underlying stability of the sector means that they can be tackled from a position of strength.

This chapter contains interviews with Fahad Al Mubarak, Governor, Saudi Arabia Monetary Agency (SAMA); Bernd van Linder, Managing Director, Saudi Hollandi Bank; and Patrice Couvegnes, Managing Director, Banque Saudi Fransi.

Articles from this Chapter

Overview

A position of strength: Growth continues, with banks diversifying their revenues, while there has been a shift towards increased use of technology
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Having posted another year of positive results, Saudi Arabia’s banking sector is positioning itself to take advantage of the government’s expansionist fiscal policy and the large number of projects this has created. In the meantime, opportunities in other areas of the lending landscape are being explored, most notably among the nation’s smaller businesses. An ongoing process of regulatory reform and intense competition continue to present challenges to the Kingdom’s banks, but underlying…

Analysis

Record levels: With remittances continuing to grow, banks are tapping into the market for money transfer services
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According to a statistical bulletin released by the Saudi Arabia Monetary Authority (SAMA) in early 2015, the amount of money remitted by expatriates in 2014 reached a record high. In total, SR153.3bn ($40.9bn) was transferred to the home countries of the nation’s foreign labour force, representing a rise of 3.6% over the previous year. Data published by the UN Economic and Social Commission for Western Asia (ESCWA) show that 1.2 people arrived in the country per 1000 population between 2005…

Interview

Well prepared: OBG talks to Fahad Al Mubarak, Governor, Saudi Arabian Monetary Agency (SAMA)
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Interview: Fahad Al Mubarak What have the Saudi authorities done to deepen the local financial sector in recent years? Fahad Al Mubarak: The authorities have recently taken a number of steps to strengthen the non-bank segment of the financial system, scale up resource mobilisation and increase financial inclusion. For instance, they have allowed the establishment of non-bank financial firms to promote real estate and leasing activities in Saudi Arabia. SAMA is mandated to license and supervise…

Interview

Enterprise draw: OBG talks to Bernd van Linder, Managing Director, Saudi Hollandi Bank
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Interview: Bernd van Linder Lending to small and medium-sized enterprises (SMEs) remains limited. What more can be done to support these companies? BERND VAN LINDER: While lending is important, it is also about providing full banking services to SMEs, including support for trade, risk management transactions and cash management solutions. Moreover, non-financial services are important to help SMEs grow and develop. These services include providing templates to help SMEs plan, manage and develop…

Analysis

Funding the gap: Lenders are showing growing interest in SMEs
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The Saudi Arabian banking sector has a significant growth opportunity in the form of the small and medium-sized enterprise (SME) sector. The nation’s SMEs account for around 90% of registered businesses and 60% of total employment, according to a recent report by Aljazira Capital, and as a result they occupy a central position in the Kingdom’s development strategy. “With lower oil prices, the importance of growing the private sector’s contribution to GDP has become clear. The best…

Interview

All shapes and sizes: OBG talks to Patrice Couvegnes, Managing Director, Banque Saudi Fransi
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Interview: Patrice Couvegnes What can the government do to encourage new credit lines, such as loans for small and mediumsized enterprises (SMEs)? How serious are local banks about increasing lending to SMEs? PATRICE COUVEGNES: The government is doing a lot in this regard, because they are serious about job creation, as well as pushing development in the private sector. The government is working with the Ministry of Finance and the Saudi Arabian Monetary Agency to provide financial guarantees for…

Analysis

Legislative change: The new mortgage law formalises real estate lending
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The effect of recently introduced mortgage legislation has become one of the more salient industry concerns in 2015. First promulgated in March 2013, many market observers thought the law a long overdue formalisation of a rapidly growing segment. Real estate lending had been steadily rising as a percentage of the consumer credit total for some years, increasing from SR70bn ($18.7bn) in 2013 to SR94bn ($25.1bn) in 2014, according to data from the Saudi Arabian Monetary Agency (SAMA). The IMF,…

Analysis

A holistic approach: Establishing a more stable lending environment through the introduction of new consumer protection regulations
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Banks in Saudi Arabia, like their counterparts elsewhere in the region, have benefitted from an increased appetite for loans from retail customers as the economy has shrugged off the effects of the 2008 global financial crisis. Retail lending, according to Aljazira Capital, increased as a share of total loans from around 21% in 2008 to 29.3% in 2014. For this reason, recent interventions by the Saudi Arabian Monetary Agency (SAMA) in the area of consumer protection are widely seen as being timely.…