We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Tue 2 Mar 2010 01:17 PM

Font Size

- Aa +

Saudi credit ticks up but remains tight in Jan

Money supply recorded by M3 at SR1,005.6bn in Jan after SR1,028.9bn in Dec.

Saudi bank credit to the private sector edged up 0.2 percent in January, official data showed, raising hopes lenders were becoming less cautious in the biggest Arab economy.

Saudi bank credit growth was flat throughout much of 2009 due to global turmoil and after defaults by local family firms.

Bank credit to the private sector rose to 709.8 billion riyals ($189.3 billion) in January after 708.77 billion riyals in December, the Saudi Arabian Monetary Agency (SAMA) said in its monthly report on Tuesday.

"It's encouraging that lending to the private sector is rising again after the sharp fall in December, but growth at this pace points to the continuing tightness of credit conditions," said Paul Gamble, head of research at Saudi investment bank Jadwa Investment.

"Greater bank lending is necessary for the private sector to play a fuller role in the economic recovery. It would also help to bolster confidence and should stimulate the stock market," he said.

Including investments in private securities, credit was 735.63 billion riyals in January after 734.24 billion riyals in December.

Annual money supply as measured by M3, the broadest benchmark of money circulating in the economy, eased to 8.3 percent after 10.7 percent in December.

M3 stood at 1,005.6 billion riyals in January after 928.427 billion riyals in the same month a year ago and 1,028.9 billion in December, the data showed.

Annual inflation inched down to 4.1 percent in January from 4.2 percent in December after a drop in home rents index offset a rise in food prices.

Last month, the Saudi central bank said housing will keep inflation rising during the first quarter but a stabilization in food prices will keep it below the 1.5 percent recorded in the previous quarter.

SAMA's net foreign assets were almost unchanged at 1,535.36 billion riyals in January after 1,520.042 billion riyals in December, the data showed.

The central bank has said it started drawing on reserves accumulated during years of high oil prices to keep the economy going. (Reuters)

Arabian Business: why we're going behind a paywall

For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.