Saudi Arabian banks will cut their bad-loan ratio to the lowest since the region’s biggest corporate default three years ago as lending grows on the back of government spending, Moody’s Investors Service said.
The ratio of non-performing loans at Saudi lenders will drop to about 2.5 per cent this year, the lowest since at least 2009, Khalid Howladar, a vice-president at Moody’s, said on August 9. That compares with forecasts of 8.5 per cent this year in the United Arab Emirates, the second-biggest Arab economy, and 4.2 per cent in the US last year, according to Moody’s.
Banks in the world’s top oil exporter are lending at the fastest pace in more than three years as the government’s $514 billion spending programme encourages companies including Saudi Arabian Mining Co. and Saudi Acrylic Monomer Co., to expand. Loan growth is recovering after two Saudi family holding companies, Ahmad Hamad Al Gosaibi & Brothers Co. and the Saad Group, defaulted on at least $15.7 billion of loans in 2009, a shock that prompted banks to virtually freeze new lending.
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