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Credit card loans rise in Saudi Arabia

Saudi Arabia was the Middle East's most profitable credit card market, according to a study by UK-based Lafferty Group, accounting for a third of bank earnings from their credit card businesses in Middle East last year.

Loans on credit cards rose to SR7.9 billion ($2.1 billion) in the three months to March 31 from SR4.68 billion a year earlier, according to data published by the Saudi Arabian Monetary Agency (SAMA), or central bank.

Consumer loans fell 1.9 per cent to SR180.5 billion in the same period.

In late 2005, SAMA slapped stringent measures on consumer lending, which had been growing rapidly as Saudis borrowed to buy stocks, a few months before a severe crash started to hit the Arab world's largest bourse. Year-on-year growth in first-quarter loans on credit cards was 40.8 per cent in 2006 while it stood at 47.4 per cent for consumer loans.

Compared to the previous quarter, first-quarter loans on credit cards rose 7.5 per cent in 2007 against a near 10 per cent rise between the first quarter of 2006 and the fourth quarter of 2005.

Credit card issuers and networks Visa Inc., MasterCard Inc. and American Express all operate in Saudi Arabia.

Banks make $95 per year on each credit card issued in Saudi Arabia compared with $20 in Egypt, Lafferty said.

Saudi Arabia also accounted for more than half of the $61 billion in outstanding consumer loans in the Gulf Arab region at the end of 2006.