The monthly statistical bulletin issued by the Saudi Central Bank (SAMA) for February 2024 showed that bank credit extended to the public and private sectors in the Kingdom reached a new record high, totaling approximately SAR 3.335 trillion. This figure represents a significant leap, reflecting the strength and resilience of the Saudi financial sector and its pivotal role in supporting the comprehensive and sustainable economic growth the country is witnessing.
According to the data, bank credit grew by 9.6% year-on-year, an increase of SAR 291.9 billion compared to the same period in 2023, when the total stood at SAR 3.042 trillion. On a monthly basis, credit grew by 0.5%, an increase of SAR 15.6 billion compared to January 2024.
Economic context and Vision 2030
This surge in bank credit comes amidst the major economic transformations spearheaded by Saudi Arabia’s Vision 2030. The Vision aims to diversify the Kingdom’s revenue streams away from oil and empower the private sector to become the primary driver of the economy. To achieve this, the Kingdom has launched a series of mega-projects and structural reforms requiring substantial financing, which the banking sector is providing with remarkable efficiency. The increased demand for loans from companies and institutions to finance their expansions and new projects, coupled with the demand from individuals for mortgages and consumer loans, is a strong indicator of high confidence in the future of the Saudi economy.
The importance of growth and its expected impact
The fact that bank credit has reached this record level carries significant economic implications on various levels:
- Domestically, this growth boosts local economic activity by providing necessary liquidity to businesses, thereby supporting job creation and increasing the productive capacity of the non-oil economy. It also contributes to achieving the objectives of the Financial Sector Development Program, a key component of the Vision, which aims to build a sophisticated and globally integrated financial sector.
- Regionally and internationally: This strong financial performance reinforces the Kingdom's position as a leading financial center in the region and enhances its attractiveness to foreign investors seeking stable and promising investment environments. It also reflects the Saudi banking system's capacity to finance major projects with global impact, such as NEOM, the Red Sea Project, and Qiddiya.
Credit structure details
The data revealed that long-term credit (over 3 years) accounted for the largest share of the total at 48.6%, amounting to SAR 1.622 trillion. This is a very positive indicator, demonstrating that financing is primarily directed towards long-term investments and strategic projects that contribute to building sustainable productive assets, rather than focusing on short-term financing. In contrast, short-term credit (less than one year) constituted 37.7%, valued at SAR 1.257 trillion, while medium-term credit (one to three years) represented 13.7%, with a value of approximately SAR 456 billion.
