Saudi Money Supply Surges 8% in March, Led by Term Deposits Growth: Central Bank Data
In March 2023, the money supply in Saudi Arabian banks increased by 8% compared to the same month the previous year, reaching SR2.82 trillion ($753 billion).
The growth was primarily driven by a 21% surge in term and savings deposits, which accounted for 30% of the total money supply at SR843.25 billion.
Demand deposits, representing 50% of the total at SR1.41 trillion, remained the largest portion.
Quasi-money holdings, making up 21% of the total, saw a 1% decrease.
Currency outside banks accounted for an 8% share, growing by 10%.
Factors contributing to the rise in term deposits are not specified in the text.
The text discusses the growth of term deposits in the Kingdom due to the higher interest rates set by the Saudi Arabian Monetary Authority (SAMA) in response to the US Federal Reserve's anti-inflationary policies.
The increase in deposits was driven by individuals and government-related entities seeking higher returns.
In 2022 and 2023, SAMA raised its key policy rates a total of eleven times, with the repo rate reaching 6 percent in July 2023, the highest level since 2001.
Since then, rates have remained unchanged.
In March 2023, US inflation rose to a six-month high, causing investors to postpone their anticipation for Federal Reserve rate cuts.
This surge in inflation led to higher borrowing costs for banks, which increased the average cost of deposits due to increased competition in the financial market.
However, Saudi banks experienced increased profits on the asset side due to higher borrowing rates, which offset the challenges of the expensive funding environment.
Saudi bank loans grew by 11% to SR2.67 trillion during this period, outpacing deposit growth.
In their April report, S&P Global recommended that Saudi financial institutions consider alternative funding strategies to manage the rapid increase in lending, driven by the demand for new mortgages.
A credit-rating agency reports that mortgage financing will make up a larger portion of Saudi banks' total credit allocation by 2023, due to a government initiative to increase homeownership.
This trend is expected to continue as deposit growth remains sluggish and banks seek alternative funding sources to support growth, particularly in corporate lending.
S&P Global anticipates that Saudi banks will adopt new funding strategies to accommodate this expansion.
The text discusses the findings of a report by S&P Global regarding the Saudi Arabian banking sector.
The report highlights the stability of Saudi deposits, which reduces the risk of maturity mismatch.
It also projects an increase in Saudi banks' foreign liabilities, estimated to be around $19.2 billion by the end of 2023, to meet the funding demands of strong lending growth.
The report adds that Saudi banks have already accessed international capital markets and expects this trend to continue over the next three to five years.
Demand deposits, representing 50% of the total at SR1.41 trillion, remained the largest portion.
Quasi-money holdings, making up 21% of the total, saw a 1% decrease.
Currency outside banks accounted for an 8% share, growing by 10%.
Factors contributing to the rise in term deposits are not specified in the text.
The text discusses the growth of term deposits in the Kingdom due to the higher interest rates set by the Saudi Arabian Monetary Authority (SAMA) in response to the US Federal Reserve's anti-inflationary policies.
The increase in deposits was driven by individuals and government-related entities seeking higher returns.
In 2022 and 2023, SAMA raised its key policy rates a total of eleven times, with the repo rate reaching 6 percent in July 2023, the highest level since 2001.
Since then, rates have remained unchanged.
In March 2023, US inflation rose to a six-month high, causing investors to postpone their anticipation for Federal Reserve rate cuts.
This surge in inflation led to higher borrowing costs for banks, which increased the average cost of deposits due to increased competition in the financial market.
However, Saudi banks experienced increased profits on the asset side due to higher borrowing rates, which offset the challenges of the expensive funding environment.
Saudi bank loans grew by 11% to SR2.67 trillion during this period, outpacing deposit growth.
In their April report, S&P Global recommended that Saudi financial institutions consider alternative funding strategies to manage the rapid increase in lending, driven by the demand for new mortgages.
A credit-rating agency reports that mortgage financing will make up a larger portion of Saudi banks' total credit allocation by 2023, due to a government initiative to increase homeownership.
This trend is expected to continue as deposit growth remains sluggish and banks seek alternative funding sources to support growth, particularly in corporate lending.
S&P Global anticipates that Saudi banks will adopt new funding strategies to accommodate this expansion.
The text discusses the findings of a report by S&P Global regarding the Saudi Arabian banking sector.
The report highlights the stability of Saudi deposits, which reduces the risk of maturity mismatch.
It also projects an increase in Saudi banks' foreign liabilities, estimated to be around $19.2 billion by the end of 2023, to meet the funding demands of strong lending growth.
The report adds that Saudi banks have already accessed international capital markets and expects this trend to continue over the next three to five years.
Translation:
Translated by AI
