Saudi banks expand lending as construction sector rises

Saudi Arabia, January 10, 2011
Despite adverse economic conditions, Saudi banks continued to expand their lending activities, companiesandmarkets.com said Friday in a report "Saudi Arabia Banking Sector Analysis".

As one of the world´s fastest growing banking markets, commercial banks that are operating in the Kingdom’s competitive environment are likely to be more efficient in near future in the region amid technological developments and government favorable policies, it said. "Even in the wake of global financial turmoil, Saudi Arabian banking industry registered impressive year on year positive growth results," the report noted.

The Saudi banks continued to lend to the enterprises as well as households.
Total credit extended to households and non-financial organizations by the Kingdom’s banks is expected to increase around 7 percent in 2010. The private sector dominates the Kingdom’s banking sector and accounts for the bulk of credit extended as well as deposits received.

Further, despite the fact that, the country was least affected compared to other parts of the world, central banks and other private bodies in the Kingdom are taking many proactive measures to avoid any kind of discrepancies in future.

Much more, many banks are investing money and maintaining liquidity through various measures to increase the confidence level of consumers.
The building construction industry in Saudi Arabia has witnessed unprecedented growth in recent years with the construction contract awards likely to grow by a compound annual growth rate (CAGR) of 12 percent to $ 39.14 billion in 2012 from $ 22.21 billion in 2008, in spite of the adverse effects of the global economic slowdown that has hit growth across the industry in the Middle East, a new report said Friday.

"The Soaring Saudi Building Construction Industry" report released by researchandmarkets.com said the sector was insulated by its strong oil reserves and ambitious Saudi government economic development plans through diversification and investment programs, which include the development of the six economic cities across the Kingdom.

The report further said the local construction industry is forecast to witness a steady and healthy growth in the medium and long term
due to rapidly growing and fast urbanizing young population which fuel demand across the commercial, residential and retail segments of the market.
The country’s flourishing tourism and leisure segment further strengthen the construction industry.

Meanwhile, the IMF forecast the MENA region to experience GDP growth of 5.1 percent in 2011, significantly higher than the global average of only 4.2 percent. The strong economic growth associated with this area has prompted a growing interest.

-SG/Agencies-