Saudi Banks Extend Loans Worth SR2.62 Trillion in January
In a remarkable surge of lending activity, Saudi banks granted loans totaling SR2.62 trillion ($700 billion) in January, marking an 11 percent increase from the same period in 2023, according to official data released by the Kingdom’s central bank.
Personal and Corporate Loans Drive Growth
The data revealed that personal loans contributed 33 percent to this growth, while corporate lending, particularly for real estate activities, as well as electricity, gas, and water supplies, made up the remaining 67 percent. The expansion of real estate loans within corporate activities can be attributed to Saudi Arabia’s ambitious giga-projects.
Personal Loans on the Rise
Personal loans, totaling SR1.25 trillion in January, experienced a 7 percent annual increase. This growth is fueled by various factors such as the demand for residential properties from expatriates, government initiatives aimed at modernizing the financial system, and the rapid digitization of lending processes.
Future Opportunities in the Personal Finance Sector
The growing number of working women in Saudi Arabia is expected to drive further growth in the market, according to advisory and consulting firm Ken Research. While banks currently dominate the personal finance sector, emerging non-banking companies and fintech firms are set to introduce healthy competition.
Corporate Lending Trends
Lending for real estate activities accounted for the highest share of corporate loans in January at 19 percent, followed by wholesale and retail trade at 13.37 percent, and manufacturing at 12.6 percent. The construction activity across Saudi Arabia’s giga-projects has helped offset the impact of rising interest rates.
Saudi Arabia’s Industrial Growth
With ambitious goals outlined in Vision 2030, Saudi Arabia aims to become a global hub for manufacturing and production. The Kingdom’s industrial exports are set to reach SR557 billion, doubling job opportunities in the sector to 2.1 million.
Riyadh’s Manufacturing Sector Thrives
Riyadh leads the transformation with the largest manufacturing sector in the Middle East, supported by investments surpassing $1 trillion. The city’s momentum is bolstered by a $26 billion government investment to expand the manufacturing sector rapidly.
Sector-Specific Loan Growth
Loans to professional, scientific, and technical activities surged by 56 percent, followed by education loans with a 38 percent growth rate, and the information and communication sector with a 34 percent increase. This reflects Saudi Arabia’s focus on enhancing education and scientific sectors.
The introduction of a new visa program to attract students and academics aligns with the Kingdom’s efforts to elevate its education system to global standards.