Saudi finance cos’ credit facilities increase 12pc

FE Team | Published: August 23, 2024 00:00:44

RIYADH, Aug 22 (Arab News): Credit facilities provided by Saudi finance companies saw 12 per cent annual rise in the first quarter of 2024, to reach SR88.6 billion ($23.62 billion), official data has revealed.
Figures released by the Saudi Central Bank, also known as SAMA, showed that personal finance accounted for the largest share, representing 28 per cent of total facilities, amounting to SR25.12 billion.
This marked a 23 per cent increase during this period.
Credit extended for residential real estate came in second, totaling SR22.91 billion, with a modest 1 per cent growth. However, its share of total facilities declined from 29 per cent to 26 per cent during this period.
Auto finance followed closely, with facilities totaling SR22.73 billion, marking an 18 per cent rise from the same quarter last year.
Commercial real estate finance accounted for 5 per cent of the total, amounting to SR4.44 billion, with a growth of 4 per cent.
Despite its smaller per centage share of 2 per cent, credit card finance saw the highest growth rate, increasing by 32 per cent to reach SR1.36 billion.
Banks continue to be the primary lenders in Saudi Arabia, with total credit reaching SR2.67 trillion by the end of this quarter. Facilities from finance companies made up just 3 per cent of this total.
Since 2022, SAMA has implemented significant amendments, including allowing finance companies to engage in multiple fiscal activities, such as real estate lending.
Additionally, SAMA introduced the first three licensed debt-based crowdfunding companies and authorized two firms to operate in microfinance, according to the latest data provided by the bank in 2023.
These developments, particularly in debt-based crowdfunding, are expected to diversify the finance companies' portfolio structure by enabling broader participation in the sector from individuals and non-financial institutions.
A report from SAMA into the stability of the industry shows that the finance companies sector faces a concentration risk, with three-quarters of total exposure in retail loans.