Saudi Banks See Profit Surge in May
In a stunning financial development, Saudi banks raked in a whopping SR7.33 billion ($1.96 billion) in profits in May, marking a 14-month high and a 16 percent increase from the previous year, according to data released by the Saudi Central Bank, also known as SAMA.
Strong Performance Amid Favorable Economic Conditions
The impressive profits come amidst high hydrocarbon prices, rapid economic expansion, and low unemployment in the region. A recent McKinsey report highlighted how these factors, along with favorable demographics, ambitious public investments, and moderate inflation, have contributed to the robust balance sheets and strong margins of Saudi banks.
Challenges and Opportunities in the Banking Sector
While the GCC banking sector has been thriving, McKinsey warned of potential risks if interest rates were to fall and bank managers became complacent. The firm advised banks to invest in transformative changes and cost reductions to enhance efficiency and resilience in preparation for future challenges.
Positive Outlook for Mortgage Lending
Amidst the financial success of Saudi banks, the mortgage lending sector saw a significant uptick in May, with a 13 percent increase in new home loans. This surge in lending is a testament to the sustainable demand in housing and the efficient regulatory environment in the Kingdom.
Changing Trends in Real Estate Market
Recent data suggests a shift in expat preferences towards owning apartments rather than villas, with many buyers attracted to new products and typologies that cater to their needs. The real estate market in Riyadh, Jeddah, and Dammam is experiencing notable growth and demand for various residential properties.
CEO Optimistic About Market Sustainability
Elias Abou Samra, CEO at Rafal Real Estate Development Co., expressed confidence in the sustainability of the current demand levels and emphasized the importance of maintaining a balanced market to prevent excessive increases in land prices.