The ratio of loans to deposits with banks in Saudi Arabia is near the lowest level in 63 months

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The ratio of loans to deposits with banks operating in Saudi Arabia at the end of July was about 75.46 percent, compared to 75.4 percent at the end of June that preceded it, and 79.2 percent in July 2019, which means that the rate is It rose 0.1 percentage point on a monthly basis, while it declined 3.8 percentage points year on year.
The ratio of loans to deposits at the end of July and last June was the lowest in 63 months, that is, since May of 2015, when it recorded about 75.06 percent.
According to the monitoring unit of the reports in Al-Eqtisadiah newspaper, based on the data of the Saudi Arabian Monetary Agency (SAMA), the decline in the ratio of loans to deposits since the end of last May resulted after the Saudi Arabian Monetary Agency (SAMA) pumped 50 billion riyals into the banking sector as a measure. My motivation aims to help banks support and finance the private sector in conjunction with the Corona pandemic.
This rate is a stimulus for banks in Saudi Arabia, and it allows them to grant more loans, as they have about 14.5 percent until they reach the maximum loan-to-deposit ratio of 90 percent, which means the availability of high liquidity in the sector.
This confirms that the liquidity currently available in the banking sector in Saudi Arabia is comfortable because it can be pumped into the Saudi economy to face the repercussions of the Corona virus and mitigate its potential effects on the economy.
According to SAMA, deposits with banks, for which the percentage is calculated are “demand deposits, time and savings deposits, repurchase agreements, and others” in addition to long-term debts, “joint loans, bonds, sukuk, sub-loans, and others.” Loans are accounted for through the loan account, minus provisions and commissions.
Starting in April 2018, the loan-to-deposit ratio calculation mechanism was revised to incentivize banks to introduce savings products by placing higher weights for long-term deposits.
Loans rose 0.8 percent (13.7 billion riyals) at the end of last July to about 1.686 trillion riyals, compared to about 1.672 trillion riyals at the end of June the previous one. Deposits fell 0.3 percent (6.4 billion riyals) to reach about 1.837 trillion riyals, compared to about 1.843 trillion riyals.
During a year, loans rose 13.2 percent (196.5 billion riyals) at the end of last July, compared to 1.489 trillion riyals at the end of the same month of 2019, while deposits rose 9.4 percent (157.2 billion riyals), from 1.678 trillion riyals in End of the same month in 2019.
From the beginning of 2013 until the end of February 2020, the highest ratio of loans to deposits with banks was about 84.8 per cent, recorded in August 2016, while the lowest rate was 73.9 per cent, and was recorded in March of 2014.
The Saudi Arabian Monetary Agency (SAMA) lowered the rate of repurchase agreements, from 1.25 per cent last March to 0.5 per cent, and also lowered the rate of reverse repo agreements from 1.75 per cent to 1 Percent in the same period, in conjunction with the reduction of the “US Federal Reserve”, as a result of the Saudi riyal being pegged to the dollar.
The reduction in interest rates at the American and Saudi levels came to face the repercussions of the Corona pandemic.Economic Reports Unit

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