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Press Dossier    By Date   04/04/2024 Saudi banking assets near $1tn landmark as double-digit growth continues: KPMG

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.

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