Riyadh: Banks listed in Saudi Arabia reported a 14 percent increase in net income to 4.02 billion riyals ($ 1.07 billion) in March 2021, from 3.53 billion riyals ($ 941 million) a year earlier. This is based on data from the Saudi Central Bank (SAMA).
The data includes 11 publicly traded banks and some foreign banks operating in the UK.
Banks’ total assets rose over 11 percentage points year over year to Riyals 3.035 trillion ($ 809.2 billion) in March. Combined deposits rose 9 percentage points year-over-year to 1.980 trillion riyals in the same month, while loans to the private sector increased 15 year-on-year to around 1.871 trillion riyals by the end of March.
Talat Zaki Hafiz, financial analyst and banking expert, said: “The obvious reason for the 14 percentage point increase in net profit for Saudi banks is the positive return of the banking sector to normal business operations after a long period of lockdown (partial and total) of more than 70 days between March and May last year due to the Covid-19 pandemic as part of the Saudi government’s precautionary measures to prevent the virus from spreading. “
During the lockdown, Saudi banks were able to serve their customers normally, although on certain days of the lockdown the sector was only operating at 25 percent of its branch network capacity, a total of 2,000 branches across the kingdom, he added.
Saudi banks used technology and electronic payments to effectively serve customers, according to SAMA’s report, which found that the rate of electronic payments for the retail sector – one-off payments for retail customers – was more than 36 percent by the end of July 2019 The payments available exceed the target percentage of the Financial Sector Development Program (FSDP), one of the key programs of Saudi Vision 2030, he underlined.
The FSDP mandates that the proportion of non-cash transactions increase by 28 percentage points by 2020, he added.
“This achievement builds on SAMA’s Payment Systems and FSDP strategy to improve electronic payments and reduce cash handling to reach 70 percent of total payments in the kingdom by 2030,” said Hafiz.
SAMA also pointed out that the record growth rates in electronic payments through the national payments system “Mada” are a result of Mada’s strategic plan, he added.
Dr. Osama Ghanem Al Obaidy, Advisor and Professor of Business Law at the Institute of Public Administration in Riyadh, said: “The increase in net profit for Saudi and overseas banks operating in the Kingdom is partly due to the sharp increase in corporate lending growth in 2021 after the Public Investment Fund (PIF) programs had helped generate additional business for contractors and loans to small and medium-sized enterprises (SMEs). “
“Saudi banks and foreign banks operating in the UK outperformed their regional counterparts. This reflects the relatively small impact of the pandemic on the performance of Saudi banks’ loan books and the higher growth in mortgage lending. “
The outlook for Saudi banks and foreign banks operating in the UK should remain positive, he added.
This increase in net income is also due to lower depreciations and higher fees and commissions, indicating the resilience and recovery of the Saudi economy from the effects of the pandemic, he added.