GCC bank lending continues to rise at slow pace
JEDDAH: The GCC banking sector has continued to tread with caution in an uncertain economic environment characterized by low interest rates. Even though a recovery in credit markets is clearly underway, it remains tentative and uneven. It will likely take several more months for the pace to significantly accelerate. The challenge of bad loans and provisions has not been fully overcome but the situation is showing signs of stabilizing, which is creating some room for additional lending. GCC bank earnings improved 2.0 percent during 3Q, helped by a robust 12.43 percent drop in aggregate provision. Nonetheless, the improvement was uneven with Saudi Arabia the only GCC economy to witness an actual increase - by a fairly substantial 31.6 percent, the Jeddah-based National Commercial Bank (NCB) said in its latest GCC capital market review.
Bank lending in Saudi Arabia continued its slow recovery with a 1.9 percent increase during Q3, a slight acceleration on the 1.7 percent rate seen in Q2. Public sector credit was still the most dynamic element and totaled SR33.9 billion during the quarter. Lending to government and quasi-government institutions expanded by 8.6 percent and by a remarkable 17.8 percent. Private sector lending, which accounts for almost 96 percent of total credit, rose by 1.6 percent, a pace equal to that seen in Q2. Encouragingly, total bank credit finally exceeded its 2009 level, rising to SR774.2 billion during the quarter, which marked a 3.2 percent increase. On a sector-specific level, commerce, which accounts for about 24 percent of credit in the Kingdom, saw an increase of 0.8 percent QoQ and 5.1 percent YoY, the NCB report said.
The Public Investment Fund (PIF) increased its lending to SR42.2 billion in 2009, 48.6 percent higher than SR28.7 billion in 2008. The Saudi Industrial Development Bank which accounted for about 4 percent of corporate debt in 2009 also boosted its lending by 21.6 percent to SR20.9 billion in 2009.
UAE: Bank lending in the UAE finally began to gather momentum in Q3 after recording near-zero growth and occasional declines during the first half of the year. Lending in the Emirates has risen consistently since June and was up by 1.3 percent during Q3. With the government encouraging banks to extend credit to especially small and medium-sized enterprises, personal loans for business purposes (which account for about 19 percent of the aggregate bank loan portfolios) rose by 4.9 percent, markedly up on the 2.0 percent growth seen in Q2. Further, boosted by government spending, credit to the transport, storage, and communication sector advanced by 2.5 percent, while lending to the construction sector expanded by 4.1 percent. -PB News
ISLAMABAD: Norwegian Defence Minister Ms. Grete Faremo presenting a shield to the Federal Minister for Defence, Ch. Ahmad Mukhtar. -App