Saudi Banks Extend Loans Worth SR2.65 Trillion in February
In a booming financial sector, Saudi banks granted loans totaling SR2.65 trillion ($706.3 billion) in February, marking an impressive 11 percent increase from the same month in 2023. This surge was revealed in the latest official data released by the Kingdom’s central bank, known as SAMA.
Personal Borrowings Drive Growth
The data showed that personal borrowings accounted for 32 percent of this growth, while the remaining 68 percent was attributed to the expansion of corporate lending. Specifically, real estate activities, as well as electricity, gas, and water supplies, saw significant growth in corporate lending.
Real Estate Financing Soars
Real estate financing for corporate dealings experienced a remarkable surge of 26.4 percent in February, reaching a total of SR271.18 billion. This increase can be attributed to the Kingdom’s extensive giga-projects, which have helped counter the impact of rising borrowing rates due to high-interest levels.
Focus on Power Sector
Saudi Arabia is also focusing on strengthening its power sector, with a particular emphasis on electricity generation, transmission, and distribution. The country is also investing in smart grid technologies to efficiently meet the growing demand from residential and commercial consumers.
Renewable Energy on the Rise
The Kingdom is making strides in shifting towards cleaner environmental sources like solar, wind, and bioenergy. Supported by favorable government policies and global diversification efforts, advancements in renewable energy capacity are expected to drive progress in the sector.
Digitalization and Personal Loans
The fast-paced progress of digitalization has played a substantial role in the expansion of personal loans. Quick lending and approval procedures have made it easier for individuals to access credit. Additionally, the growing need for residential properties from expatriates and government initiatives aimed at modernizing the financial system have contributed to this growth.
Real Estate Sector Leads Corporate Credit
In February, lending for real estate constituted the highest share of corporate credit at 19 percent, totaling SR271.2 billion. This increase in real estate credit reflects the growing demand in the sector, with residential sector prices witnessing a surge.
Diverse Sector Growth
Apart from real estate, lending for wholesale and retail trade, manufacturing activities, professional, scientific, and technical activities, education, and administrative and support service activities also saw robust growth. The Saudi government recognizes the crucial role of sectors like science and education in the Kingdom’s transformation and has initiated various programs to foster innovation and scientific thinking.