Developer borrowing for infrastructure and residential projects helps to boost profits of Saudi banks
Developer borrowing for infrastructure and residential projects is helping to boost the profits of the leading banks in Saudi Arabia.
A new report by Riyad Capital suggests that the assets of the Kingdom’s banks will overtake GCC leader UAE in three years and the top ten banks in Saudi all saw their profits rise by 12% in the last three months.
The Saudi government’s $500 million-plus spending plans has cleared the way for private investors and developers such as Jabal Omar Development, who raised $1.33 billion last month for a real estate project in Mekkah, to raise funds for hundreds of projects. This has been reflected by a surge in lending by banks and record Islamic bond levels.
According to a report by Bloomberg analyst Arqaam Capital says banks in Saudi Arabia are forecast to experience 8.7% profit growth in Q3. The next highest in the Gulf will be 5.4% in Qatar, 1.3% in the UAE, reflecting the level of construction investment in the countries. While figures were not presented for Bahrain, Kuwait’s banks will witness a decline of 3.5% in the quarter.