Al Rajhi Bank limits lending ahead of ‘reforms’ in Saudi
Women to play bigger role
DUBAI, Aug 14, (RTRS): Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, expects low-single digit loan growth for the rest of 2018 as it curtails its loans while economic reforms take shape.
Saudi Arabia is in the early stages of “Vision 2030”, a multi-billion dollar drive to open up society and diversify its economy away from oil revenues, and Al Rajhi’s chief executive Steve Bertamini is expecting medium-term opportunities from it.
“There’s not enough liquidity in the banking system to support all of it, so there will need to be a large component of international finance to come on line. Being very well capitalised, very liquid will be an asset for us,” he said.
While Saudi bank lending remains generally subdued, with Al Rajhi’s loan growth shrinking by 1.7 percent in the second quarter, it should post low-single digit loan growth for the remainder of 2018, before a return to more “normalised” mid-single digits in 2019, Bertamini said.
Some initiatives to boost the housing market - the government has raised its home ownership target for Saudis to 60 percent by 2020 from around 47 percent now - are already helping the kingdom’s biggest mortgage provider.
Other reforms are taking more time to have an effect.
“Women driving and increased participation of women in the workforce will take a bit of time to work its way through the system, but in my view that will should more than offset any short-term impact from the departure of expats,” Bertamini said.
A plan to reduce reliance on expatriates to generate jobs for Saudis has seen the number of foreign workers fall by more than 700,000 since last year.
Al Rajhi was nevertheless seeing steady growth in its consumer customer base, he said, adding that the expatriate exodus might have some impact on its remittance business.