Deposits with Saudi banks narrowing as government withdraws funds | the latest information

Deposits with Saudi banks declined as the government withdrew the emergency funding that it had injected when oil prices fell, but it is unlikely that banks will suffer from shortages of oil. liquidity due to low loan demand.

Eight of the Kingdom's twelve major banks recorded a decline in deposits in their second-quarter financial results, announced over the past two weeks.

Deposits in the first bank dropped by 19% from last year to 66.2 billion The National Commercial Bank (BNC), the largest bank in the Kingdom, broke the trend to increase deposits of 1% to 317.7 billion riyals, according to the bank today, while deposits with Bank Al Jazeera were down 3% to 47.8 billion riyals. . Deposits with the Islamic Development Bank also increased by 4%.

In 2016, the government injected deposits into the banking system to offset a shortage of financing due to falling oil prices. But the price of crude has now recovered in part, and the central bank wants to avoid the outflow of money by raising interest rates in accordance with US interests.

As a result, monetary authorities said earlier this year that it would terminate emergency financing,

Central bank data showed that government deposits of all commercial banks fell by 11.7% over last year to 313.6 billion riyals in June, with term deposits and savings accounting for the decline.

Special saw a sharp rise, so the total deposits in Commercial banks only declined 1.2% to 1.61 trillion riyals

The contraction of deposits is a risk of new financial shortage in the banking sector, but the kingdom's weak economic growth keeps demand for funds at a low level. On an annualized basis, bank lending to the private sector increased only 0.6% in June.

Central bank data show that the ratio of loans to deposits in commercial banks fell to 78.1% in June (90%), suggesting that banks have ample room to increase lending if the credit application resumes.

The central bank changed the loan-to-deposit ratio equation in April, giving long-term deposits greater weight to encourage banks. Offer savings products.