GCC bank lend­ing con­tin­ues to rise at slow pace

The Pak Banker - - Front Page -

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

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