Following the release of Tadawul-listed banks’ third-quarter 2021 financial results, KPMG issued the latest edition of its “Banking Pulse,” a quarterly report series outlining the latest trends in the Kingdom’s banking sector.
“The banking sector continued to lead the charge towards recovery in the first nine months of FY2021, thanks to sustained strong growth in mortgage finance, the total lending exposure of Saudi banks to the private sector is edging towards a phenomenal SAR 2 trillion mark” commented Khalil Ibrahim Al Sedais, Office Managing Partner – Riyadh KPMG in Saudi Arabia.
“The rise of digital banking during the pandemic was undoubtedly a contributing factor to this phenomenon. The recently issued licenses to STC Bank (formerly STC pay) and Saudi Digital Bank as the first digital banks in the country are a potent reminder of the digital imperative and Vision 2030’s objective of increasing non-cash transactions to 70% by 2025,” said Ovais Shahab, Head of Financial Services, KPMG in Saudi Arabia.
“In our latest KPMG CEO Outlook, 78% of surveyed CEOs in Saudi Arabia pointed to increased demands from stakeholders- including investors, regulators and customers, for enhanced reporting and transparency on ESG issues.Growing exposure to global financial markets and heightened attention from ratings agencies have invigorated Saudi banks on their ESG priorities,” Shahab concluded.
The banking sector in the Kingdom continued to perform well, posting a 6.3 percent increase in total assets since December 31, 2020, and at least a 12 percent increase in net income in the nine-month period compared to the same period last year.
The sector’s total deposits passed the previous milestone for the first time on September 30, 2021. Simultaneously, the sector’s net credit loss charges, which had been rising since March 2020, have continued to fall – a positive sign.
During the reported nine months, there was an 18% year-on-year reduction. In Q3 2021, the sector’s net profit after zakat and taxes increased to SAR 36.28 billion.
Despite the unavoidable negative repercussions of Covid-19, these figures continue to remind us of the government’s, regulators’, and banks’ successful actions, according to Al Sedais.
For the nine months ending September 30, 2021, the banking sector reported an average decrease of 18.3 percent in expected credit losses (ECL) to SAR 9.7 billion.
According to the KPMG report, the Saudi banking industry is demonstrating consistent themes of efficiencies through digitalization, with the number of bank branches falling by 5% to under 2,000 in the last year, while the number of ATMs expanded significantly.
