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The top executive at Saudi Arabia’s biggest lender has said banks are to double lending to the private sector in 2011.
In an interview with Reuters, Abdul-Kareem Abu Al-Nasr, CEO of the National Commercial Bank (NCB) said that the latest set of government handouts had had an impact on the Kingdom’s financial institutions.
A new approach to lending, he said, would occur with increased economic activity, as multi-billion dollar infrastructure projects got underway and with a renewed demand from the private sector.
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"The economic effect of the stimulus that the king has announced has a turbo charging effect because more money will be injected into the economy and this money will be looking for financial services and opportunities," he told the newswire.
"We are already seeing a higher level of activity and competition with Saudi banks on the lending side and we expect in 2011 to see something close to 7-10% in terms of growth”.
He added, "Last year the total lending in the banking sector grew close to 5 percent and it mostly came in the second half of 2010."
"Overall the environment is conducive of growth and the banks are looking for yield because we are working in a low interest rate environment and the banks have a lot of liquidity so they have to find ways to make this liquidity work for them."
Earlier this month, the Saudi King announced he was investing $39 billion on security and religious police forces, in addition to infrastructure projects.
This followed a previous handout of $37 billion at the beginning of March.
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FEATURED COMMENT
This is welcome news for the business community and the people at large. Institutional lending has traditionally been co