Saudis financing their consumption with more loans
The volume of consumer loans given by Saudi local banks rose by 22 percent to reach SR321 billion in the second quarter of the current year compared to the same period last year, local media said quoting a report released by SAMA.
Loans given to purchase car and equipment rose to SR61.8 billion while loans for real estate stood at SR41.47 billion, SAMA (Saudi Arabian Monetary Agency) said in its report.
According to the SAMA report, the volume of consumer loans in the first quarter stood at SR307.4 billion.
Meanwhile, loans for credit cards dropped by 2 percent in the second quarter to reach SR7.7 billion compared with SR7.8 billion in the same period last year, the report said.
On the other hand, SAMA assets continued growth and registered SR2.59 trillion by the end of the second quarter compared to SR2.26 trillion in the second quarter of last year, the report said.
The consolidated financial position of the commercial banks in the Kingdom also rose to SR1.8 trillion in the second quarter from SR1.61 trillion in the same period last year, the report said.
Customer deposits at Saudi banks also rose in the second quarter of the current year to reach SR1.32 trillion compared to SR1.16 trillion in the same period last year, according to the report.
Last July, banking experts warned against the growing rate of consumer loans and their adverse impact on the national economy.
Consumer loans capture nearly 80 percent of Saudi local banks’ retail loan portfolio, which adversely affect the economy as these loans are not directed to boost production, the experts were quoted as saying.
They also warned against risks posed by some offices spread over different parts of the Kingdom and used to offer loans at high interest rates and buy debts of potential customers.
The said offices are not licensed and have exploited the weakness of the SAMA control over such situations coupled with the pressing need of individuals in getting funds, the experts said.
On the other hand, Saudi banks held the security organs responsibility to track down illegal loan providers whose publicity posters are posted on ATM machines, e-portals or sent through SMSes.
The role of banks in the face of these irregular practices is limited to awareness and raising the level of banking culture among customers in addition to the immunization of information systems at banks, Secretary General of Banking Awareness and Media at Saudi banks.