The annual growth in Saudi Arabia money supply fell in August, but its foreign assets inched higher for the first time since November, official data from the Saudi Arabian Monetary Agency (SAMA), showed Monday. Foreign assets controlled by SAMA, the Kingdom's central bank, came in at SR1.434 trillion ($382.4 billion) in August compared to SR1.433 trillion a month earlier and SR1.560 trillion in August 2008. Money supply growth slowed for the fourth straight month to 12.3 percent in July compared to a year earlier, down from 15.3 percent in July. M3 money supply, the broadest measure, stood at SR994.7 billion in August, according to a report posted on SAMA's website. The spike in crude oil prices earlier this decade filled the Kingdom's coffers and made it one of the largest holders of US Treasurys and other securities. The government has been selling some of these assets to stimulate its economy and support its financial system, but banks have been reluctant to extend credit. SAMA has injected billions into local banks after the collapse of Lehman Brothers Holdings Inc. last September, and has arranged for government entities to deposit cash into the system. The central bank also cut its reverse repo rate - the interest paid to commercial banks on their deposits at SAMA - to 25 basis points in June in order to spur credit growth in the local economy. Lending to the private sector increased for the third consecutive month following the rate cut. Bank claims on the private sector increased to SR742.6 billion in August from SR728.84 billion in July, the highest level since November. Banks' profits fall 6.2% Profits generated by Saudi commercial banks, including the 11 listed ones, fell 6.2 percent in the July-August period, central bank data showed on Monday. Excluding branches abroad, Saudi banks made a profit of SR5.33 billion during ($1.42 billion) in the period, according to the Saudi Arabian Monetary Agency's (SAMA) website. SAMA did not indicate if the data related to net profit and described it only as cumulative profit. Saudi-listed firms were due to start publishing third-quarter earnings this month. The SAMA data showed that cumulative profit of Saudi banks stood at SR8.25 billion in the first quarter of 2009 and SR7.92 billion in the second quarter. Many Saudi banks posted lower net profit during the second quarter. Morgan Stanley said last week that Saudi Arabian banks' third-quarter net income would be under pressure due to the higher amount of money banks set aside to cover bad loans and on subdued fee income.
