Al Rajhi Bank pegs growth hopes on reforms

Lender bets on kingdom’a plans to boost home ownership and role of women

Saudi Arabia’s second- biggest bank is betting that government efforts to develop the entertainment industry, boost home- ownership and open up the role of women in the economy will fuel growth.

The kingdom is undergoing an economic overhaul driven by Crown Prince Mohammad Bin Salman that includes removing restrictions on cinemas, concerts and women driving and working. It also plans to subsidise home loans to expand the private- sector’s role in funding mortgages as part of the transformation plan to diversify the economy away from oil and reduce the population’s reliance on state spending.

Al Rajhi Bank is also planning to expand its corporate- lending business on optimism that businesses will start borrowing again later this year, after loans to the private sector fell in 2017, Chief Executive Officer Steve Bertamini said in an interview. Rising demand for corporate and housing loans should help Al Rajhi outperform peers in 2018, he said.

“Our goal is to outperform the industry,” Bertamini said. “Housing demand gives us confidence that we’ll be able to continue to do that, and if corporate demand begins to improve, especially if the government begins to fund some projects, we think that will be positive for the banks and also for us.”

Al Rajhi’s fourth- quarter prof- it was 2.45 billion riyals ( Dh2.39 billion, $ 653 million), beating the highest analyst estimates as it boosted income from financing and investments.