Saudi Banks’ Foreign Assets Surge by 22 Percent in February
In a remarkable development, the foreign assets of Saudi Arabia’s commercial banks saw a significant increase of 22 percent in February, reaching a total of SR347.63 billion ($92.7 billion) compared to the same month the previous year. This surge, as per recent data from the Kingdom’s central bank, known as SAMA, showcases a substantial expansion in the institutions’ international holdings and investments.
Foreign Liabilities Witness a 38 Percent Surge
On the flip side, Saudi banks experienced a 38 percent surge in foreign liabilities during the same period, soaring to SR288.22 billion. This rise, encompassing various financial obligations to banks outside the Kingdom, resulted in the calculation of net foreign assets amounting to SR59.41 billion. Despite the growth in international holdings, the increase in liabilities led to a 21 percent decrease in the net figure from SR75 billion recorded in the same month the previous year.
Overall Foreign Assets and Reserve Holdings
Additionally, SAMA reported that its net foreign assets reached SR1.55 trillion in February, indicating the overall financial strength and global position of the Kingdom’s banking sector. However, this figure reflects a 5 percent decline compared to the same month last year. The main difference between the foreign assets of central and commercial banks lies in their purpose and role within the financial system.
Reserve Assets and Investments in Foreign Securities
Total reserve holdings totaled SR1.62 trillion, a 5 percent decline from the same month last year. Reserve assets for financial institutions comprise a range of highly liquid assets held to ensure stability and fulfill short-term financial obligations. Among these holdings are monetary gold and Special Drawing Rights, which act as supplements to existing funds. Banks also hold foreign currency and deposits in international institutes and invest in foreign securities such as government and corporate bonds issued by global entities.
Investment Approach and National Funds
In February, investments in international securities accounted for 60 percent of the reserve position. Saudi Arabia has been enhancing its investment approach by directing capital into national funds like the Public Investment Fund and National Development Fund. A decrease in reserves could indicate a diversification of SAMA’s holdings across various financial opportunities.