Business : Saudi banking is least leveraged

Saudi Arabia is the largest economy and banking market in the Arab world, with almost 40 per cent of all deposits in interest free Shariah-compliant savings products and an embryonic, high growth mortgage, takaful (Islamic insurance), consumer credit and leasing industries.

Despite the $24 billion Al Gosaibi-Saad Group debt debacle, Saudi banking is the least leveraged in the GCC, with loans/deposit ratios rarely in excess of 80 per cent and a conservative, best in regional breed regulator in SAMA.

The persistence of $100-plus Brent crude oil prices, the government’s new $138 billion social welfare programme, a natural oligopoly with only 12 major banking networks across the kingdom, a fabulously wealthy sovereign that happens to be the world’s leading oil producer with $500 billion in central bank reserves, the largest public spending programme in the Middle East, tens of billions of riyals in non-interest bearing deposits, a huge capital market now opening up to foreign investors makes the macro case for Saudi bank investing compelling, even irresistible.

* username: rupertbu