03/02/2016 05:26 AST
Saudi bank credit to both consumers and corporations accelerated during the fourth quarter of 2015, a report from Jadwa Investment said.
Bank credit proved resilient and grew by 10.8 percent, and 4.5 percent, year-on-year, respectively.
In December, bank credit to the private sector grew by 0.6 percent, month-on- month (9.2 percent, year-on -year), said the Jadwa report.
Growth in Saudi bank credit to the private sector slowed slightly, month-on-month, in December.
In the fourth quarter, net new credit was lower, year-on-year for most sectors, with the largest fall in manufacturing (down by SR17.4 billion). That said, net new credit was still positive for all sectors except finance.
Resilience in bank credit combined with slowing growth in deposits has led to some tightening in bank liquidity conditions in recent months. The 3-month SAIBOR continued to edge upwards as a result, the report added.
“However, we think bank liquidity is still at comfortable levels, which partly reflects the sustained growth in bank credit so far,” said the Jadwa economists.
The 3-month SAIBOR continued to edge upwards at the start of 2016, rising 4.00 by 16 basis points since the end of December.
“We think banks still enjoy strong liquidity levels, with holdings of liquid assets of around SR381 billion in December,” said the research team.
Jadwa also said that Saudi Arabia’s fiscal reserves dropped to a four-year low last year.
The reserves dropped to $611.9 billion at the end of 2015, the lowest level since 2011, down from $732 billion a year before, the report added.
Jadwa said it expected reserves to fall to around $500 billion by the end of 2016, after oil prices fell by three quarters since mid-2014.
In December, the net monthly change to government accounts was negative at $7.6 billion. The decline was due to a net withdrawal from the projects account, while the current deposits and reserve accounts remained unchanged, stated the Jadwa Chart Book for February 2016.
SAMA foreign exchange reserves posted their second largest monthly decline during 2015, according to the report.
A combination of government withdrawals, capital outflows, and falling oil export revenues caused foreign reserves to post their second largest monthly decline of 2015 at $19 billion, stated the Jadwa researchers.
According to the report, economic data for December indicated a slowing trend in activity. Data on consumer spending continued to point to a softening trend.
In December, year-on-year growth in cash withdrawals from ATMs and point-of- sales transactions slowed to 1.3 percent, and 6.5 percent respectively. The non-oil PMI fell to a new record low of 54.4 in December, but continued to point to an expanding non-oil economy.
Steel production reached 5.9 million tons last year, 6.7 percent lower than in 2014, recording its first annual decline since 2012.
Annual growth in total bank deposits continued to slow, falling to 1.9 percent (-1.1 percent, month-on-month), according to the chart book.
The negative monthly change spanned both government (-SR3.9 billion) and private sector deposits (-SR17.5 billion).
Jadwa said that bank FX sales to other customers in Saudi Arabia rose notably in recent months, reaching SR80.1 billion in December. Jadwa said it expected inflation to soar this year to 3.9 percent, from 2.2 percent last year, as a result of the price hikes.
The food segment accelerated to 1.4 percent, while the housing segment and the core index posted slight slowdowns. Prices of local foodstuffs accelerated as the deflationary trend in international food prices eased, added the report.
Preliminary Q4-2015 data, derived from the budget statement, showed that the Kingdom posted a fourth consecutive current account deficit. The trade balance remained in surplus.
We expect the deficit in Q4 to be revised upwa
Arab News
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