JEDDAH: Bank credit to the Saudi private sector remained resilient in January, according to a report. In January, bank credit to the private sector rose by 0.9 percent month-on- month and 9.2 percent year-on-year, Jadwa Investment said in its Saudi Chartbook for March 2016.
Most of the growth in credit came in the form of short and medium-term maturities, while long-term debt outstanding fell by SR34 billion. This could reflect corporations renegotiating their credit profiles with banks, according to the report.
“We expect demand for credit to be high in coming months as corporations seek to manage their cash flows while the government deters its spending,” Jadwa researchers added. Total bank deposits fell for the second consecutive months, down by SR7.8 39 billion in January.
Government deposits rose by SR11.4 billion, while private sector and other deposits fell by SR16.5 billion and SR2.7 billion respectively, added the report. It said the slowdown in deposits pushed up the loan-to-deposit ratio to 86.1, a seven-year high.
In January, monthly bank profits edged downwards year-on-year for the first time since April 2013. During 2015, profits remained strong while bank provisions were at stable levels.
The resilience of banks during 2015 came as the value of non-performing loans remained manageable at 1.1 percent of total loans throughout the year, according to the report. It said the NPL ratio remained stable at 1.1 percent throughout 2015, pointing to limited exposure by banks during 2015. Economic data for January indicates a slowdown in activity. Growth in consumer spending remained positive, according to the chart book.
In January, year-on-year growth in cash withdrawals from ATMs rose to 8.2 percent, while point-of-sales transactions continued to soften to 5.7 percent.
The non-oil PMI fell to another new record low of 53.9, but continued to point to an expanding non-oil economy, according to the report. It said that monthly steel production posted a sharp decline to 280 thousand tons, its lowest level since January 2009.
Net withdrawals from government accounts with Saudi Arabian Monetary Agency reached SR33.4 billion ($8.9 billion) in January. Within these accounts, government current deposits and projects fell by SR28.1 billion ($7.5 billion), and SR5.9 billion ($1.6 billion) respectively, while the government reserve rose slightly by SR589 million ($157 million).
It said that SAMA FX reserves posted another large fall, mainly owing to lower oil prices in December. December data showed that non-oil exports continued to improve month-on-month, according to the chart book.
Non-oil export volumes continued to rise in both month-on-month and year-on-year terms. Imports rose, month-on- month, but new LOCs point to a likely slowdown in coming months. Nonoil exports rose for the third consecutive month, reaching $4.2 billion in December, added the report.
Volumes exported also posted a strong rise, reaching its highest level in fifteen months. New LOCs opened point to a likely slowdown in imports in coming months, stated the report.
It added that Saudi crude production remained unchanged month-on-month, averaging 10.2 million barrels per day in January. Both Iran and Iraq managed production increases but Venezuelan output continues to follow a downward trend which started in January 2015.
