Arab News, Thu, Apr 04, 2024 | Ramadan 25, 1445
Saudi banking assets near $1tn landmark as double-digit growth continues: KPMG
Saudi Arabia:
Saudi Arabia’s total banking assets grew 9.5 percent in 2023 compared to the
previous year, nearly reaching the milestone of $1 trillion by year-end.
The financial results of the 10 banks listed on
the Saudi Stock Exchange, Tadawul, demonstrated a robust performance, posting an
11.72 percent increase in net profit compared to 2022.
According to data released by the Kingdom’s
central bank, SAMA, and compiled by analytical firm KPMG, the total profits
reached SR70.07 billion ($18.68 billion) last year, compared to SR62.72 billion
in 2022.
Total assets rose to SR3.7 trillion in 2023 from
SR3.38 trillion in 2022.
This is a result of the banking industry
leveraging the benefits of economic expansion and a higher interest rate
environment, a release by KPMG said, adding that they expect this momentum to
continue in 2024.
The increase in net profit was also underpinned by
a 10.89 percent increase in net special commission income and a 4.39 percent
decline in the expected credit loss charge compared to the same time period of
the previous year.
“ECL allowances dropped due to better portfolio
performance across wholesale and retail segments and no systematic default
incidence this year. The economic expansion has rather supported distressed
borrowers to settle and favourable renegotiate their debts,” the Head of
Financial Services at KPMG in Saudi Arabia, Ovais Shahab, said in the release.
“Timely repricing of assets and liabilities has
also resulted in an increase in net margin, while the industry’s fee income also
grew by 2.43 percent,” he added.
Furthermore, the industry’s loan-to-deposit ratio
stands at 99.2 percent, which is on the higher side, especially in view of
promising economic outlook and healthy asset growth prospects, the release
highlighted.
Multiple measures were introduced to maintain
sufficient liquidity in the banking system that could foster growth and fulfill
domestic requirements, it added.
Further, banks have continued to pursue strategies
of recapitalization of retained earnings and issuance of sukuk in domestic and
international markets for a stronger financial position.
KPMG commented that going forward,
uncertainties seem more interconnected and emergent in the global banking
industry and that is partially relevant for the wider region as well.
Geopolitics threats have emerged as the top risks
that could hamper growth momentum in multiple countries, while disruptive
technologies and operational issues remain equally relevant for all economies.
“The Saudi Central Bank continues to be active in
dialogue with the market participants, playing a pivotal role in managing risks
and supporting the ambitious economic expansion agenda of the Kingdom,” Shahab
said.