The foreign assets held by commercial banks in Saudi Arabia have experienced a remarkable 22 percent increase as of February, amassing a sum of SR347.63 billion ($92.7 billion). This growth, compared to the same timeframe last year, signifies a substantial escalation in the banks’ international investments and holdings.
Simultaneously, Saudi banks’ foreign liabilities have also risen sharply by 38 percent, reaching SR288.22 billion. This upsurge, which includes diverse financial commitments to non-domestic banks, results in a net foreign asset balance of SR59.41 billion.
Notwithstanding the strides made in foreign asset growth, the net assets have declined by 21 percent from the previous year’s SR75 billion recorded in the same month, mainly due to amplified liabilities.
The Saudi Arabian Monetary Authority (SAMA) noted that its net foreign assets stood at SR1.55 trillion in February, highlighting the overall robustness and international standing of the Kingdom’s banking sector. However, this figure also represents a 5 percent decrement from the previous year.
It’s crucial to distinguish between the foreign assets of central banks, which are mainly aimed at reserve management and monetary policy, and those of commercial banks, which are intended for business operations, client services, and investment ventures.
The total reserves held were reported at SR1.62 trillion, marking a 5 percent fall from last year’s figures. Reserve assets typically include various highly liquid assets like monetary gold, Special Drawing Rights from the International Monetary Fund, and the reserve position in the IMF, all contributing to financial stability and meeting short-term obligations.
Moreover, banks have stakes in foreign securities, such as government and corporate bonds, which provide not only income but also portfolio diversification. In the context of February’s figures, investments in international securities constituted 60 percent of the reserve assets.
With Saudi Arabia pushing forward its investment strategy, funneling capital into domestic entities like the Public Investment Fund and National Development Fund, the decrease in reserves may suggest a strategic distribution of SAMA’s holdings across a variety of financial prospects.