RIYADH: Saudi banks are closing more branches Kingdom-wide even as these lenders hand out more loans for consumers, official central bank data showed.
The figures from the Saudi Central Bank (SAMA) monthly report showed a decrease in the number of banks' branches in the Kingdom by 95 to 1,969 compared to the second quarter of 2020, when the number of branches reached 2,064.
This is a 4.6 percent reduction. At the same time, the number of ATMs decreased by 8.9 percent.
Commercial banks, which this year have more deposits than before, increased lending to individuals in the second quarter of this year by 17 percent to SR394 billion. This trend has been on the rise since Q2 of 2019.
The main reasons for the decline is the increase of online and digital banking, but some experts believe that this is purely an operational issue.
Riyadh-based independent economics analyst Talat Hafiz said that the reason behind the decline in branches is due to some banks relocating to locations more convenient to customers, or with better footfall.
Hafiz also believes Saudi banks are gearing towards a digital future. “Banks will be structured in a different way that reflects the direction of the banking sector towards digital banking, using more advanced technology,” he said.
The decline in the number of banks is not spread evenly across the Kingdom.
In the Riyadh region, 29 branches were closed, representing 30.5 percent of closures nationwide. The number of branches in the Makkah region decreased by 6.1 percent after the closure of 27 branches, representing 28.4 percent of all shutdowns.
The number of branches in the Eastern Province decreased by 6.7 percent after closing 27 branches there, representing 28.4 percent of closures.
Other regions with fewer branches saw less of a reduction or even an increase. In the northern border region three branches opened, increasing from 18 to 21 branches. Also in Al-Jawf, three branches were opened, meaning an increase from 27 to 30 branches.
The number of branches did not change in either the Hail region, which has 43 branches, or the Najran region, with 27 branches.