Riyadh’s Financial Boost: A report from Saudi Arabia’s central bank indicates a noteworthy 11 percent year-on-year increase in lending, with totals reaching SR2.62 trillion ($700 billion) as of January. The expansion in lending activities is predominantly driven by a 33 percent surge in personal loans and a 67 percent rise in corporate loans, particularly emphasizing real estate and utility sectors.
Real estate ventures, especially the grandiose giga-projects, have played a crucial role in counteracting the adverse effects of heightened borrowing costs due to increased interest rates. Personal lending has also seen an upswing, with a 7 percent annual increase, amounting to SR1.25 trillion in January.
Market analysis firm SPER attributes the robust growth in personal loans to various factors, including the influx of expatriates and government efforts to modernize financial systems. The acceleration of digital processes in loan approvals has also significantly contributed to the market’s expansion.
Observations from Ken Research suggest a positive trend in the market, bolstered by the increasing number of working women in Saudi Arabia. Competition in the finance sector is also expected to intensify with the entrance of non-banking entities and fintech companies.
In corporate lending, real estate activities were at the forefront, comprising 19 percent of the total at SR263 billion. This is closely followed by the wholesale and retail trade, and manufacturing activities, which also hold substantial shares in corporate lending.
Despite rising interest rates, MEED reports that construction activity is booming, supported by the government’s Public Investment Fund and the ambitious giga-projects. These developments are in line with Saudi Arabia’s Vision 2030, which aims to transform the nation into a global manufacturing and production hub.
Riyadh is leading this industrial transformation with significant investments, including a $26 billion government allocation to the manufacturing sector. The upcoming Saudi Smart Manufacturing exhibition is testament to the city’s focus on smart technology and manufacturing advancements.
According to Saudi Central Bank figures, loans to professional, scientific, and technical sectors have witnessed the most substantial growth, with a 56 percent increase. Education and information and communication sectors have also seen noteworthy growth rates, reflecting the Kingdom’s focus on enhancing its educational and scientific landscape, as highlighted by a new visa program aimed at attracting global students and academics.