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Saudi Arabia Commercial Banking Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-3071 Description In March 2008, we updated all data for the 59 countries surveyed with official figures, sourced fromcentral banks and regulators. In most cases, we were able to find data that pertained to the end of 2007: inalmost all other cases, the data pertains to September 30 2007. As a result, the insights that we derive onparticular countries are based on consistently sourced information that is far more current than it had beenpreviously.Although we gather data for countries such as the US, Japan, Australia and the eurozone, the vastmajority of the 59 countries whose banking industries we survey are, or are generally seen as being,emerging markets. For all the widely publicised problems of large banks in developed countries, in thewake of the subprime banking crisis in the US, 2007 was an extremely good year for the banking sectorsof the emerging markets. In local currency terms, the median growth in assets was 21% (in Brazil). Themedian rates of growth in loans to non-bank customers and in deposits were 22% (in India) and 18% (inMorocco). In some countries - and not just those enjoying oil booms - the figures were spectacular. InUkraine, for instance, assets and deposits rose by 76% and 62% respectively. Loans grew by more thanone-third in Bulgaria, Estonia, Latvia, Lithuania, Romania, Russia, Serbia, Slovenia, Peru, Bahrain, Iranand Nigeria. Deposits also rose by more than one-third in most of these countries. In absolute terms, Saudi Arabia’s banking sector enjoyed reasonable growth through the year toDecember 31 2007. In local currency terms, total assets, total loans and total deposits increased by 25%,20% and 21% respectively. The loan/deposit and the loan/asset ratios fell, while the loan/GDP ratio rose.As always, changes in Saudi Arabia’s banking sector must be considered relative to other countries. Ofthe 59 countries surveyed by BMI, Saudi Arabia ranks 23rd in terms of local currency asset growth, 36thin terms of local currency loan growth and 22nd in terms of local currency deposit growth. Saudi Arabia’srankings in terms of its loan/deposit, loan/asset and loan/GDP ratios are 20th, 11th and 38th, respectively.In a country with per capita GDP of US$15,708, deposits per capita are US$7,875 or so. In Q108, we envisaged that total assets, total loans and total deposits would rise by 15%, 12% and 7%annually through the 2007-2012 forecast period. Now, despite using an improved forecasting method, weare still looking for similar growth rates - 15%, 13% and 13% respectively. Since Q108, we have calculated, on a consistent basis, a Commercial Bank Business Environment Rating(CBBER) for each of the 59 countries surveyed. The CBBER includes an assessment of the limits ofpotential returns: it does this by taking into account the size, growth potential and bancassurancepotential of the banking sector, as well as aspects of the economy in 2007. The CBBER also depends onan assessment of the risks to the realisation of potential returns: this reflects BMI’s assessments ofoverall country risk, together with the regulatory and competitive environment. Saudi Arabia’s CBBER is 65.0. In the context of the Middle East, this means it is a fairly attractivecountry, given that the CBBERs are higher in each of Bahrain, Israel, South Africa and the United ArabEmirates. The scores for the banking elements of the risks to potential returns are the third highest in theregion (after United Arab Emirates and Libya). The ratings score for the market structure - the mostimportant component of the assessment of the limits to potential returns - is 56.3. This is quite averagefor the region. Table of Contents
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