Bank lending in Saudi Arabia continued its slow recovery
with a 1.9 percent increase during Q3, a slight acceleration on the 1.7 percent
rate seen in Q2. Public sector credit was still the most dynamic element and
totaled SR33.9 billion during the quarter. Lending to government and
quasi-government institutions expanded by 8.6 percent and by a remarkable 17.8
percent. Private sector lending, which accounts for almost 96 percent of total
credit, rose by 1.6 percent, a pace equal to that seen in Q2. Encouragingly,
total bank credit finally exceeded its 2009 level, rising to SR774.2 billion
during the quarter, which marked a 3.2 percent increase. On a sector-specific
level, commerce, which accounts for about 24 percent of credit in the Kingdom,
saw an increase of 0.8 percent QoQ and 5.1 percent YoY, the NCB report said.
The Public Investment Fund (PIF) increased its lending to
SR42.2 billion in 2009, 48.6 percent higher than SR28.7 billion in 2008. The
Saudi Industrial Development Bank which accounted for about 4 percent of
corporate debt in 2009 also boosted its lending by 21.6 percent to SR20.9
billion in 2009.
UAE
Bank lending in the UAE finally began to gather momentum
in Q3 after recording near-zero growth and occasional declines during the first
half of the year. Lending in the Emirates has risen consistently since June and
was up by 1.3 percent during Q3. With the government encouraging banks to
extend credit to especially small and medium-sized enterprises, personal loans
for business purposes (which account for about 19 percent of the aggregate bank
loan portfolios) rose by 4.9 percent, markedly up on the 2.0 percent growth
seen in Q2. Further, boosted by government spending, credit to the transport,
storage, and communication sector advanced by 2.5 percent, while lending to the
construction sector expanded by 4.1 percent. By contrast, bank claims on the
private sector rose by a more disappointing 0.7 percent to AED726.4 billion,
something that furthermore represented a clear slowdown from the pace of 2.0
percent seen in Q2. By contrast, echoing the pattern seen in Saudi Arabia, bank
claims on the government sector surged by 8.1 percent to AED99.6 billion, a
remarkable turnaround form a 0.6 percent decline during 2Q10.
The NCB report said credit to the construction sector,
which accounts for about 13 percent of the banks' lending portfolios, finally
turned positive in June after three consecutive months of decline. According to
the Dubai Chamber of Commerce & Industry, there were some $629.5 billion
(as on July 2010) worth of ongoing real-estate and construction projects in the
emirate and the volume looks likely increase sharply in the near future.
Overall lending to the construction sector rose by 4.1 percent during Q3.
Kuwait
Bank lending in Kuwait has remained subdued even as
compared to the rest of the region. The pace of credit growth nonetheless
rebounded from -0.6 percent in Q2 to the very marginal growth of 0.3 percent in
Q3. Lending to the construction sector, which had surged by 5.5 percent in the
previous quarter, remained stagnant during Q3. Real-estate loans on the hand
recorded 0.2 percent growth following a 1.8 percent decline in Q2, the report
said.
Qatar
Even though loan growth in Qatar remains well below the
extraordinary levels seen during the 2003-08 oil boom, when it peaked at about
50 percent, credit expansion has stayed ahead of the rest of the region. Total
loans surged by 4.3 percent during Q3. Also Qatari banks, however, preferred to
lend to government-related entities and projects with public sector credit
expanded by 9.0 percent, markedly ahead of the 2.9 percent increase seen in Q2.
Bahrain
Bank credit in Bahrain during the Q3 staged the most
robust recovery seen in entire the region, resuming growth at the pace of 2.6
percent after a 1.1 percent decline during Q2. Business loans, which constitute
about 66 percent of banks' total portfolios in the Kingdom, grew by 6.9 percent
in a dramatic turnaround from the 4.6 percent drop seen in Q2. By contrast, the
growth of personal loans slowed to 2.5 percent from 5.4 percent growth in Q2.
Oman, similarly, saw a resumption of credit growth to 0.7 percent, as compared
to a 0.3 percent decline in Q2, the NCB report said.
