Al-Rajhi Capital revealed that mortgage lending continued to decline and recorded the lowest monthly figure in December, falling to 6.4 billion riyals last month from 7.4 billion riyals in November 2022 due to rising rates. of interest that affected mortgages, noting that the average monthly loan for the year 2022, amounted to 10.0 billion riyals, in line with their estimates, adding that for the fiscal year 2023, the average monthly loan will decrease to 7.0 billion riyals, at 30% of the average for the year 2022.
Al Rajhi Capital forecast loan growth to remain healthy over the next two to three years, supported by corporate lending, which will offset slowing mortgage and personal finance growth.
According to Al-Rajhi Capital, the growth trend of loans in the Saudi banking system continued (around 14% per year). However, on a monthly basis, it has remained stable. Most notable was the sharp increase in government deposits, which rose 6% monthly and 45% annually. This led to a slight improvement in the ratio of simple loans to deposits in December.
Credit growth in December in the system remained flat m/m and +14.1% m/y (November: +0.7% m/m, +14.6% m/y). Bank credit to the private sector decreased 0.3% m/m in December and grew 12.6% m/y (November: +0.6% m/m and +13.5% m/y).
Deposits grew +0.3% m/y and +9.1% y/y (November: +0.7% m/y and +10.5% y/y), led by growth in time deposits ( +3.1% m/y, +32.2% y/y). Growth can be seen coming from the government (+6.1% m/m), while private time deposits were flat m/m. In addition, the deposit mix deteriorated in December with the demand deposit ratio falling to 57.9%, the lowest level seen in the last ten years.
According to the “Al Rajhi Capital” report, the loan-deposit ratio in the system improved by +0.3% MoM, reaching around 102.3% in December, while the revised loan-deposit ratio decreased slightly to 81.5 % ( November: 81.3%). Liabilities between banks grew +1.0% month on month to reach 93 billion riyals in November from 92 billion riyals in November.
And “Al Rajhi Capital” indicated that the profit before zakat and taxes for the month of December amounted to 6.2 billion riyals, +6% per month and +21% per year (November: -5% per month and 46% per year). Fiscal 2022 profitability is 29% higher than fiscal 2021 profitability, driven by a combination of lower loan loss provisions and loan growth.
Waabant’s total value of point-of-sale (POS) sales increased by 13.8% yoy in December (+13.5% yoy in November). Meanwhile, cash withdrawals decreased in value terms by 2.9% yoy in December (-1.8% yoy in November) to reach 47.4 billion riyals.
Tags: interest rates . Rajhi Capital Mortgage loans continue to decrease average loans decrease