Tuesday 31, July 2018 by Kudakwashe

Saudi Arabia banks' deposits drop as Government pulls back funds

 

Eight of the top 12 banks reported lower deposits in their Q2 earnings, released over the past couple of weeks.

  

Saudi Arabia’s banks have posted lower deposits in their Q2 earnings as the government withdraws emergency funds injected when oil prices slumped, although weak loan demand makes a liquidity crunch unlikely.

Alawaal Bank’s deposits dropped to 19 per cent from a year ago, to SAR 66.2 billion ($18 billion) and deposits at Bank Aljazira shrank three per cent to SAR 47.8 billion, reported Reuters.

Additionally, in contrast the Kingdom’s biggest lender, National Commercial Bank shrugged off the trend posting one per cent increase in deposits to SAR 317.7 billion, while Alinma Bank saw a four per cent increase.

The data released by the central bank also revealed that deposits by Government entities in all commercial banks shrank 11.7 per cent from the corresponding period in 2017 to SAR 313.6 billion in June.

The Government placed deposits in the banking system to counter a shortage of funds due to low oil prices in 2016. Oil prices have now partially recovered and the central bank wants to avoid capital outflows by having Saudi Arabia interest rates rise in line with US rates.

  

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