Sama backs Saudi banks with SR26bn

By the end of last January, its credit amounted to SR353.2bn, against SR379.4bn at the end of 2008.

This withdrawal is one of the most important reasons behind the drop in overall assets of the authority for the second month in a row from a record figure posted in November, which amounted to SR1.730 trillion. The highest level for foreign deposits, it should be noted, was also posted in November, amounting to SR384bn. Sama announces its statistics monthly but it does not offer any clarification regarding the drastic changes influencing monetary and banking activities.

It is believed that the withdrawal from foreign deposits is associated with the steps taken by Sama during the past months in order to support stability in the Saudi banking system in light of the global financial crisis; reduce the cost of loans and inject more cash, so that Saudi banks would be able to perform their financial functions.

This might also be related to the government's desire to continue spending on projects in a manner that exceeds estimations in light of the drop in oil revenues, and alleviates pressure from the drawback in project implementation in the private sector.

Statistics by Sama indicate that its investments in securities abroad have increased by over SR109m in January to SR1.154 trillion despite the gloom governing investment horizons for a year.

Statistics showed positive developments that parallel steps taken to support liquidity in the banking sector. They are related to the decrease in banks' demands from the government to SR210m against SR242m by the end of 2008.

Sama monetary policy

Recently, Sama has adopted a monetary policy that targets the achievement of stability in the financial sector in light of the global crisis, in addition to cash availability and reduction of loan costs in order to meet local demand on credit in order to make sure that banks do their job in financing the development of the kingdom.

Among the most important steps taken is establishing time deposits with local banks for a relatively longer period on behalf of governmental authorities and bodies. This was done through coordination with governmental authorities and bodies as such deposits are in fact deposits for clients that are involved in deposits rate to loans, which enables banks to expand their credit operations.

Total amounts of money withdrawn from banking networks amounted to SR14.939m compared to SR14.894m last December. Direct withdrawals amounted to SR16.145m last January against SR16.021m the month before. Total monetary withdrawals stood at SR31.084m in January compared to SR30.915m last December.

The report published by Sama on its website says that the number of ATMs around the kingdom increased by 138 machines by the end of January compared to December. The number of ATM cards exceeded 12.3 million, up by 1.4 million cards compared to 2003.


See also:
Saudi banks post SR26.3bn profit despite downturn
Saudi Arabia sees no need for loans to cover deficit