SAMA: Saudi Finance Companies Assets Grow 13% in 2023

Riyadh, June 10, 2024 – The Saudi Central Bank (SAMA) has reported a 13% increase in total assets for the Saudi finance companies sector, reaching SAR 64.2 billion in 2023, according to its Annual Performance Report released today. The report highlights robust growth across key financial indicators, underscoring the sector’s expanding role in supporting the Kingdom’s economic diversification under Vision 2030.

Context and Background

The Saudi finance and real estate refinance companies sector has been instrumental in providing alternative financing channels beyond traditional banking. SAMA’s annual report, now in its latest edition, offers a comprehensive overview of the sector’s performance, including capital, assets, and portfolio growth. In 2023, paid-up share capital rose by 6% to SAR 15.5 billion, while the total finance portfolio expanded by 12% to SAR 84.7 billion. These figures reflect increasing demand for financial services and the sector’s growing maturity.

Key Details

The report reveals that the retail sector accounted for the largest share of the loan portfolio at 77%, followed by micro, small, and medium enterprises (MSMEs) at 20%, and corporates at 3%. This distribution underscores the sector’s focus on consumer financing and its growing support for MSMEs, which are vital to job creation and economic diversification. Additionally, the real estate refinance sector saw a remarkable 48% surge in total assets, reaching SAR 31 billion, driven by increased activity in housing finance. The finance companies sector also reported a net income of SAR 1.7 billion, reflecting profitability despite a dynamic economic environment.

By the end of 2023, the sector employed over six thousand individuals, with Saudi nationals comprising 86% of the workforce. This high rate of Saudization highlights the sector’s contribution to local employment and talent development, aligning with Vision 2030’s goal of empowering Saudi citizens.

Implications and Impact

The growth in assets and financing activity signals strong confidence in the Saudi financial sector and its ability to meet the evolving needs of businesses and consumers. The expansion of MSME financing is particularly significant, as these enterprises are key drivers of innovation and employment. Moreover, the surge in real estate refinancing assets reflects the ongoing transformation of the housing market, supported by government initiatives to increase homeownership. Internationally, the report reinforces Saudi Arabia’s position as a leading financial hub in the region, attracting investment and fostering economic stability.

Vision 2030 Alignment

The achievements of the finance companies sector are closely tied to the objectives of Saudi Vision 2030, which aims to diversify the economy, enhance financial inclusion, and develop a robust private sector. By providing accessible financing options and promoting Saudization, the sector contributes directly to the Kingdom’s long-term prosperity. As SAMA continues to regulate and support this vital industry, its growth trajectory is expected to accelerate, further solidifying Saudi Arabia’s role as a global financial powerhouse.

20 Questions

Q1. What was the total asset growth for Saudi finance companies in 2023?

A1. The total assets of Saudi finance companies grew by 13% in 2023, reaching SAR 64.2 billion, as reported by the Saudi Central Bank (SAMA) in its Annual Performance Report.

Q2. How much did the paid-up share capital increase?

A2. The paid-up share capital for the finance companies sector increased by 6% to SAR 15.5 billion in 2023, reflecting growing investor confidence in the sector.

Q3. What was the total finance portfolio value in 2023?

A3. The total finance portfolio expanded by 12% to SAR 84.7 billion in 2023, indicating strong demand for financing services across various sectors.

Q4. What was the net income of the finance companies sector?

A4. The net income of the finance companies sector stood at SAR 1.7 billion in 2023, demonstrating profitability and operational efficiency.

Q5. How did the real estate refinance sector perform?

A5. The real estate refinance sector witnessed a 48% increase in total assets, reaching SAR 31 billion in 2023, driven by robust housing finance activity.

Q6. What percentage of the loan portfolio was retail?

A6. The retail sector accounted for 77% of the loan portfolio, highlighting its dominant role in consumer financing within the Saudi finance companies sector.

Q7. What share did MSMEs hold in the loan portfolio?

A7. MSMEs accounted for 20% of the loan portfolio, underscoring the sector’s support for small and medium enterprises, which are vital to economic diversification.

Q8. How much of the loan portfolio was corporate?

A8. The corporate sector comprised 3% of the loan portfolio, indicating a smaller but still significant portion of financing directed to larger businesses.

Q9. How many employees worked in the finance companies sector?

A9. By the end of 2023, the finance companies sector employed over six thousand individuals, contributing to job creation in the Kingdom.

Q10. What percentage of employees were Saudi nationals?

A10. Saudi nationals accounted for 86% of the total workforce in the finance companies sector, reflecting successful Saudization efforts aligned with Vision 2030.

Q11. Where can the Annual Performance Report be found?

A11. The Annual Performance Report of the Saudi Finance and Real Estate Refinance Companies Sector for 2023 is available on SAMA’s official website.

Q12. What does the growth in assets indicate about the sector?

A12. The growth in assets indicates strong confidence in the Saudi financial sector and its expanding capacity to meet the financing needs of businesses and consumers.

Q13. Why is MSME financing important?

A13. MSME financing is crucial as these enterprises drive innovation, create jobs, and contribute significantly to economic diversification under Vision 2030.

Q14. How does real estate refinancing support the housing market?

A14. Real estate refinancing provides liquidity and affordable housing finance options, supporting government initiatives to increase homeownership among Saudi citizens.

Q15. What role does SAMA play in the sector?

A15. SAMA regulates and supervises the finance companies sector, ensuring stability, transparency, and alignment with the Kingdom’s economic objectives.

Q16. How does the sector contribute to Vision 2030?

A16. The sector contributes to Vision 2030 by enhancing financial inclusion, supporting private sector growth, and creating employment opportunities for Saudi nationals.

Q17. What is the significance of the 48% growth in real estate refinance assets?

A17. The 48% growth signifies increased activity in housing finance, reflecting rising demand for homeownership and the effectiveness of government housing programs.

Q18. How does Saudization benefit the financial sector?

A18. Saudization builds a skilled local workforce, reduces unemployment, and ensures that the sector’s growth benefits Saudi citizens directly, in line with Vision 2030.

Q19. What international implications does this growth have?

A19. The growth reinforces Saudi Arabia’s position as a leading financial hub, attracting foreign investment and showcasing the Kingdom’s economic resilience and diversification.

Q20. What can be expected for the sector’s future?

A20. With continued regulatory support and Vision 2030 initiatives, the finance companies sector is poised for further growth, innovation, and contribution to the national economy.

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