Saudi banks' investments abroad increased by more than SR45 billion in 2009 to offset weak domestic credit and the absence of government bonds, Saudi Arabian Monetary Agency (Sama) December statistical bulletin said on Thursday. The Kingdom's 12 commercial banks' aggregate investments abroad surged to SR110.4 billion at the end of November 2009 from around SR64.8 billion in 2008. Sama said investments at the end of November 2009 were the highest in more than 10 years and one of their highest levels in the Saudi banking history. The figures showed they were almost six times their level at the end of 2003. The surge in foreign investments boosted the banks' collective foreign assets to around SR203.7 billion. According to the Saudi American Bank Group (Samba), the surge in foreign investments was a result of a drive by Saudi banks to invest in high-return US securities and their tightening local credit policy. “Many banks have opted to channel surpluses toward higher-yielding foreign securities. The continued weakness in lending growth comes despite fresh measures by the authorities to stimulate lending,” Samba said. “Aside from the good returns on foreign assets, there are a number of reasons why banks have been more selective about private sector lending.” Bankers also attributed the slackening domestic credit to waning local demand and the fact that most Saudi banks have become more selective in lending. Sama's figures showed total credits provided by Saudi banks to the private sector had jumped by nearly SR144 billion through 2008 before they started to slow down in 2009. From around SR734 billion at the end of 2008, the banks' claims on the private sector grew by only around 1.9 percent to SR748 billion at the end of November. After surging by nearly 33 percent through 2008, the banks' claims on the public sector dipped by around 25.3 percent to SR180.3 billion at the end of November 2009 from about SR241.9 billion at the end of 2008. Sama data further revealed that the banks have done better in terms of deposits, which swelled by around 9.8 percent to SR929.9 billion at the end of November from SR846 billion at the end of 2008. However, foreign liabilities dropped to around SR108.4 billion from nearly SR112.4 billion in the same period, Sama's latest statistical bulletin said. The latest Sama bulletin said sharp growth in foreign assets and the drop in liabilities largely widened Saudi banks' net foreign assets, which ballooned to about SR95.3 billion at the end of November from SR41.5 at the end of 2008. However, net foreign assets had tumbled to their lowest level of around SR45 billion at the end of September. Moreover, demand deposits jumped to around SR412.9 billion from SR342.4 billion. Business and individuals deposits soared to about SR395 billion from nearly SR327 billion, Sama report said. The report further said the banks' foreign liabilities dipped by nearly SR4 billion in the same period, noting that most of the decline was in dues to foreign banks and other parties. Bankers said the weak domestic credit to waning local demand and the fact that most Saudi banks have become more selective in lending. The uptick in private sector credit growth in August, proved to be something of a false dawn as growth softened again in the following two months, recording a new low of one percent for the 12 months to October. “Deposit growth has also trended down, but was still firm at 12 percent in October... private sector credit growth was growing at a double-digit rate as recently as April, but has been on a sharp downward path,” Sama said.
