Saudi banks focus on equity to support private firms

RIYADH - Saudi banks raised their investment in securities to support a cash-hungry private sector in April, according to a fresh set of official data that also showed a continued decline in money supply.

By (Reuters)

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Published: Mon 24 May 2010, 11:23 PM

Last updated: Mon 6 Apr 2015, 11:09 AM

M3 growth, one factor potentially influencing inflation, slowed for a seventh straight month in April to 2.6 per cent—the lowest in at least seven years — against 4.6 per cent in March as customers cut rewarded deposits with banks faster than in the previous month, central bank data showed on Sunday.

Time and savings deposits — M3’s second biggest component — fell by almost 41 billion riyals — or 11.7 per cent — in the 12 months to end-April while their annual fall was about 10 per cent in March.

Demand deposits — M3’s biggest component — meanwhile added 71.5 billion riyals or 18.5 per cent in the 12 months to end-April.

Bank claims on the private sector added just 23.2 billion riyals — or 3.2 per cent — in the 12 months to April to a total of 750.6 billion riyals, which is the highest since the 748.8 billion riyals of November, 2009, the previous record.

A breakdown of these claims shows however that much of their growth came from investment in private securities which grew 41.4 percent—or by 8.8 billion riyals — to a record 29.9 billion riyals in the 12 months to end-April.

In the meantime bank credit to the private sector totalled 720.7 billion riyals — an increase of two per cent in the year to end April — and still below the 723.4 billion riyals record of November, 2009.

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