The Saudi banking sector’s loans increased to SAR2.68 trillion ($715.5 billion) in April 2024, marking an 11 percent increase compared to the same month in 2023, according to official data.Â
The figures released by the Saudi Central Bank (SAMA) showed that personal loans constituted 47 percent of banks’ total lending, while corporate loans made up the remaining 53 percent.
The expansion of real estate projects under Saudi Arabia’s Vision 2030 program, combined with high demand for housing credit from expatriates and the digitalization of banking operations, are likely key drivers behind the growth in both personal and corporate lending.
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Personal loans and housing credit
Personal loans, including all types of credit extended to individuals, totaled SAR1.27 trillion, a 7 percent increase during this period. This can be attributed to the Kingdom’s initiatives to promote home ownership, which have motivated individuals to pursue housing loans, supported by government-backed programs and incentives.
The increasing number of expatriates in Saudi Arabia has also heightened the demand for residential properties, leading to more borrowing for home purchases. Additionally, the digitalization and streamlining of banking operations have made the lending process more convenient and efficient for both lenders and borrowers.
Corporate loans and real estate activities
Among corporate loans, those granted for real estate activities comprised the majority at 20 percent of the total, amounting to SAR278.86 billion, a 27 percent increase. Loans extended for wholesale and retail trade, accounting for 13 percent of corporate holdings and totaling SAR190.06 billion, saw a 9 percent annual rise.
Outlook for lending growth
According to an April 2024 report by The Banker, Saudi Arabia’s financing growth is expected to continue its upward trajectory, driven by sustained demand for corporate and wholesale credit, compensating for a moderation in the retail mortgage market. The year 2024 may also mark the realization of long-awaited opportunities for direct lending to the country’s giga-projects.
Lending for professional, scientific, and technical activities recorded the highest annual increase at 52 percent, despite comprising a relatively low percentage share of total loans at SAR6.3 billion. Real estate credit within corporate activities closely followed, growing by 27 percent, while lending for electricity, gas, and water supplies increased by 31 percent, reaching SAR151.94 billion.
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