Saudi Banks See Record High Credit Card Loans in Q3 2024
In a groundbreaking development, credit card loans provided by Saudi banks skyrocketed to a historic high of SR30.27 billion ($8.07 billion) in the third quarter of 2024, as per recent data released.
Key Takeaways from SAMA Data
Statistics from the Saudi Central Bank, SAMA, revealed a remarkable 14.24 percent surge in credit card loans compared to the same period in the previous year.
Consumer loans, excluding real estate financing, finance leasing, and margin lending, also witnessed a notable increase, reaching SR462.29 billion, reflecting a 4.01 percent growth rate.
Growth Trends in Consumer Lending
Amidst these figures, education lending stood out with the highest growth rate, soaring by 16 percent to SR8.24 billion.
Loans for vehicles and private transportation constituted the largest share within the identified sectors by SAMA, accounting for 3 percent of the total at SR11.93 billion.
Additionally, a staggering 91 percent of consumer loans were categorized as “Others.”
Evolution of Lending Preferences
Consumer loans, encompassing various borrowing options, are characterized by fixed repayment schedules and lower interest rates, often used for significant expenses like education or vehicle purchases.
In contrast, credit card loans offer revolving facilities with flexible repayment options, appealing to users seeking instant credit and convenient payment methods.
Driving Factors Behind Credit Card Loan Growth
The surge in credit card loans can be attributed to the increasing digitization of banking services, government initiatives to boost consumer spending, and attractive promotions like cashback rewards and loyalty points.
Additionally, the growth of e-commerce has further fueled credit card adoption, aligning with Saudi Arabia’s Vision 2030 initiative to enhance digital commerce.
Rise of Contactless Payments in Saudi Arabia
Saudi Arabia has seen a significant rise in contactless payments, with a 98 percent adoption rate in in-person transactions, a substantial increase from just 4 percent in 2017.
This shift underscores the Kingdom’s evolving payment dynamics, with a decline in ATMs and a surge in card issuance, signaling a growing demand for contactless payment options.
Andrew Torre, Visa’s regional president, highlighted the rapid transition to contactless payments in Saudi Arabia, driven by government support and increasing consumer demand.
Future Outlook for Saudi Arabia’s Payments Market
As the fintech-friendly regulatory environment in Saudi Arabia continues to evolve, the cards and payments market is projected to reach $146.8 billion in annual value by 2024, with a compound annual growth rate of over 6 percent from 2024 to 2028.
With digital payment adoption on the rise, the market is poised for further growth, empowering small businesses with secure transaction options and aligning with the goals of Saudi Arabia’s Vision 2030 initiative.