Saudi Arabia’s Banking Sector Boom shows the kingdom’s compelling economic story

  • As per the updated and most recent KPMG studies and report, it shows overall a definite surge in levels of net profit and Net Assets.
  • As revealed during the fourth edition of KPMG’s “GCC listed banks’ results: Embracing Digital” report,” “Saudi Arabia’s Banking sector witnessed a surge of 11.3% and 2.1% respectively in the overall Net profit, and Net Assets pooled down collectively during 2018.”

As stated by Muhammad Tariq, head of financial services at KPMG Al Fozan & Partners, Saudi Arabia, “All in all the year 2018 turned out to be a huge positive phase for most of the listed banks in the kingdom. The Average Net profitability surged ahead as it was underpinned by the highest average SAIBOR (Saudi Arabian Interbank Offered Rates), modest growth in assets, and a slight decrease in pricing.”

This recent 4th edition of KPMG’s “GCC listed banks’ results” report analyses and has published result compiled from results of top listed commercial banking establishments across the region for the year ended 31 December 2018.

In the vast kingdom of Saudi Arabia, there are a net total of 26 commercial Banks operating under Saudi Arabian Monetary Authority (SAMA) regulatory regime and out of which 12 are national banks, and 14 are foreign bank branches.

This exclusive report stated and pointed out core reflectors for the Banking sector boom, the strongest as observed during a decade. Core reflectors of Banking Sector boom are:

  • Strong surge in the home financing sector and its emergence as a critical driving force in 2018, that was powered in by key government initiatives taken in line with developing affordable housing units.
  • As well to facilitate the necessary legal and financing environment to encourage greater home ownership.
  • The asset growth was at its peak amongst all Islamic Banks that thus, underscored demand for complete Shariah compliant facilities.
  • The loan impairment charges also surged to an all-time high of 14.8 percent from previous years, which also was part of new expected credit loss (“ECL”) methodologies per IFRS 9 compliances.

Mr. Tariq also added that come 2019 and there would be more stringent yet flexible law mechanism enforced on Banking sector like “Upgrading the Accounting standards, Basel III level requirements, and an watchful eye on Anti Money Laundering (AML) and Know Your Customer (KYC) requirements, so as to maintain regulatory pressure, as well as reshaping strategies for Banking sector and reforms for ensuring foolproof compliance standards while retaining the agility.” Thus, Saudi Arabia is leaving no stone unturned to reduce the scams and money laundering cases, thereby building the trust force amongst the Banking customers.