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Tue 23 Mar 2010 04:09 PM

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Saudi private lending to grow 8% - Banque Saudi Fransi

Most of the increase will come in the second half, Saudi bank says in its report.

Saudi private lending to grow 8% - Banque Saudi Fransi
BIG BANK: Banque Saudi Fransi is the kingdom’s fifth-biggest bank by assets. (Getty Images)

Saudi private lending will rise eight percent this year on improved bank liquidity, after stagnating in 2009, Banque Saudi Fransi said.

Most of the increase will come in the second half, Banque Saudi Fransi said in an e-mailed report, with borrowers still currently hesitant about seeking credit for new projects. The bank, part-owned by Credit Agricole, predicts the kingdom’s non-oil gross domestic product will grow by 3.7 percent in 2010,

The Saudi Arabian lender said in its report that the GDP forecast relies on the ability of Saudi banks to increase lending during the year, which it anticipates will happen because they are enjoying high liquidity levels which they want to invest domestically.

“Already, there are signs that banks could begin parting with their excess liquidity through new loans rather than safeguarding them in low-interest deposits with the Saudi Arabian Monetary Agency (SAMA) and abroad, mostly on an overnight basis,” said the report.

Banque Saudi Fransi, the kingdom’s fifth-biggest bank by assets, said commercial bank foreign asset holdings, after soaring during 2009, declined almost 11% in January from December levels.

It believes the demand for credit will grow with the award of more state tenders for infrastructure projects in energy, water, power, and airports; the Saudi government plans to spend $400 billion over five years to stimulate the economy.

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