Samba Financial Group, Saudi Arabia's third-largest bank by assets, expects Saudi banks to see double-digit asset growth by early 2020, supported by government plans to diversify its oil-based economy, its chief executive told Reuters.
Riyadh plans to increase state spending to an all-time high of 1.11 trillion riyals ($295 billion) this year, from 1.03 trillion in 2018, in an effort to spur economic growth that has been hurt by relatively low oil prices.
Exemplifying the investment spree is the multi-billion dollar Qiddiya entertainment resort near Riyadh, whose construction was begun in April last year and which promises more than 300 recreational and educational facilities.
"The government announced a number of transformational projects in entertainment, tourism, housing, and small and medium enterprises (SMEs). All these initiatives will add multi-billion dollars to Samba and the banking industry," Rania Nashar said in an interview.
Nashar, who in 2017 became the first female CEO of a listed Saudi commercial bank, expects loan growth to pick up in the third quarter. Lending activity to the private sector, a sign of banks' confidence in the economy, had weakened over the past few years as the oil price slump slowed down the kingdom's economic growth and cut demand for loans.
Yet lending grew 2.8 percent in 2018, mostly driven by demand for mortgages under government plans to increase home ownership. Total asset growth reached 2.5 percent during the same period.
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