A recent report concluded that Saudi banks weathered the storms during the Corona (Covid-19) pandemic through business continuity management systems, expecting the sector to continue to perform well in 2021, indicating that the rapid transformation in the market encourages integration into the banking sector.New mergers
(KPMG) issued a report on the performance of the banking sector in the Kingdom during the Coronavirus (Covid-19) pandemic, the extent to which the sector was affected by the epidemic, the role of the Central Bank (SAMA) in providing support, and the opportunities for the emergence of new mergers due to market conditions. With regard to the level of performance of the banking sector in Saudi Arabia in 2020, the report said that the sector in general has performed exceptionally well to recover from the uncertainty that looms during the height of the epidemic. This essentially halted the increase in expected credit losses to less than 40% from the previous year.
Postponement of loans
The report stressed that the good performance of the banking sector was a direct result of government support through the Central Bank programs, and the conscious measures that banks have always taken, and pointed out that Saudi Arabia quickly launched support programs to mitigate the economic impact of the epidemic on individuals and local companies, indicating that it is among these Programs The Central Bank of Saudi Arabia has played a pivotal role. It provided banks with guarantees for loan deferment and other easing measures.
“KPMG” said that the rapid transformation in the market encourages the merger in the banking sector, and in line with the regional trend towards integration; The National Commercial Bank and Samba Financial Group are already in an advanced stage, and they expect a merger during the first half of this year. The report added that the completion of the merger of AlAhli and Samba is expected to lead to a large extent to the establishment of the largest lender in the Kingdom.
Overabundance of banks
The GCC countries are widely seen as suffering from an overbanking, and this fact combined with the increasing pressure from fintech companies and other market entrants has created an environment that may lead to more mergers and acquisitions in the near future, he pointed out. The Corona pandemic may be an additional incentive to do business if economic growth continues to decline or bad loans continue to grow.
Banking performance in 2020
The sector has performed exceptionally well.
The good performance was a direct result of the government support.
Expected credit losses have stopped increasing to less than 40% from 2019.
What is KPMG
KPMG is a professional services firm, and one of the well-known auditing firms along with Deloitte, Ernst & Young-EY and PricewaterhouseCooper-PwC. The company was incorporated in 1987 in the Netherlands as a result of the merger of (Peat Marwick International -PMI) and (Klynveld Main Goerdeler – KMG).
The company provides three main types of services: financial audit, taxation and consulting. Its tax and advisory services are further divided into different groups of services. The letters in the company name (KPMG) denote the names of the main founding members of the company.
(K) refers to (Klynveld), who is the founder of the accounting firm (Klynveld Kraayenhof & Co) in Amsterdam in 1917.
(P) refers to Peat, who was the founder of the accounting firm William Barclay Peat & Co in London in 1870.
(M) refers to Marwick, founder of the accounting firm (Marwick, Mitchell & Co) in New York City in 1897.
(G) refers to Goerdeler, president of Deutsche Treuhand-Gesellschaft for many years and then president of KPMG.