Saudi Arabia Banking Pulse
Saudi Arabia macro & sector overview
KSA GDP Growth Rate¹, %
2.4
0.3
2018
2019
(4.1)
2020
4.8
2.8
2.8
2021F
2022F
2023F
US Fed Funds Rate², SAIBOR %
0.6
0.6
0.5
0.5
0.6
0.3
0.3
0.3
0.3
0.3
Q1'21
Q2'21
Q3'21
■US Fed rate movement Overnight SAIBOR
KSA Money Supply³. (%, Quarterly)
Q3'20
Q4'20
2.1
Q1'21
0.5
1.8
Q2'21
0.8
-0.7
0.2
Q3'21
1.1
Macro overview
•
•
In October'21, IMF increased its 2021 growth projections
for the nation's GDP to 2.8% from the June'21 forecast of
2.4%, due to faster recovery from the COVID-19 crisis
Saudi Arabia's average PMI for Q3'21 increased to 56.2
compared to 56.0 for Q2'21, due to a sharp rise in business
activity and new work
The Saudi Central Bank has extended their Deferred
Payment Program for SMEs for an additional three months,
until the end of 2021
In October'21 the US Fed officials stated plans to start
reducing the pace of its monthly asset purchases as soon as
mid-November'21. In Sep'21, the US Fed held interest rates
steady
• Overnight SAIBOR rose by 0.57 bps QoQ to 0.55% at the end
of Q3'21
•
•
.
Fitch retained the outlook on all Saudi banks' long-term issuer
default ratings to "stable" in Q3'21, to reflect reduced
pressure on the operating environment and a stable outlook
on the sovereign rating
In Q3'21, M2 money supply growth stood at 0.2% QoQ, and
5.7% YoY to reach SAR 2.0tn
Growth in M2 money supply was primarily driven by 3.3%
QoQ increase in Time & Savings deposits to SAR 0.5tn
which was partially offset by 0.5% decrease in Demand
deposits to SAR 1.3tn
M1 decreased by 0.7% QoQ to SAR 1.5tn, while M3 money
supply grew 1.1% QoQ to SAR 2.3tn
Banking overview Q3'21
KSA Banks L&A and Deposits4, %*
2.8
3.3
2.1
2.3
Q3'20
Q4'20
■L&A % QoQ
5.0
Q1'21
13.12.6
2.8
2.2
1.2
Q2'21
Q3'21
■Deposits % QoQ
KSA Banks' Profitability4, %*
33.5
27.1
11.2
3.2
(0.9) (0.4)
(0.2)
(8.2)
(15.6)
Q3'20
Q4'20
20.2
Total loans & advances (L&A) of top ten KSA banks grew by
2.8% QoQ in Q3'21, and deposits grew by 1.2% QoQ in Q3'21
L&A (ex-SNB) grew by 3.8% (-1.4 % points QoQ) in Q3'21
while the deposits (ex-SNB) grew by 1.6% (-2.7 % points QoQ)
The growth in aggregate L&A is supported by momentum in
retail mortgages and growth in lending in manufacturing and
commerce sectors, as the economy opens up post-pandemic
Total interest income increased by 3.2% QoQ in Q3'21 after
increasing by 11.2% in previous quarter
Aggregate profitability increased by 20.2% QoQ in Q3'21, as
compared to a decline of 8.2% QoQ in Q2'21
Interest Income % QoQ ■Net Income % QoQ
KSA Banks' Profitability4, %*
13.5
LLLLL
Return ratios have increased with economic activity returning
back to normal after the pandemic
Return on equity (ROE - Q3'21 annualized) increased by
~86bps QoQ to 12.0%
Similarly, return on assets (RoA - Q3'21 annualized)
increased by 19bps to 1.8% in Q3'21 from 1.6% in Q2'21
1.8
■M1
M2
■M3
3
1 IMF forecast, 2 US Board of Federal Reserve, ³ Saudi Central Bank,, 4 Company Financials, "Data for top ten KSA banks by
asset size as of September 30th 2021, QoQ stands for quarter over quarter, net income excludes the gains on deemed
disposal of asset reported by Bank Aljazira in Q2'21
4
■ROE %
■ROA %
ALVAREZ & MARSALView entire presentation