Consumer lending in Saudi Arabia is on the upturn, as the Kingdom has generally recovered from the aftereffects of the COVID-19 pandemic. Moreso, due to consumer behaviour and expenditures unwaveringly affected by the pandemic, along with 15% VAT, consumer lending is set to develop further amidst price hikes and global inflation.
A number of factors are motivating the constant progression of retail lending in Saudi Arabia in 2023, especially due to the financial crunch resulting from weaker spending confidence due to the growing prices of everyday commodities and skyrocketing global inflation. As such, to meet demand, banks in Saudi are advancing and supporting the streamlining and simplification of lending procedures, thereby in turn supporting the growth of retail lending.
Real estate lending in Saudi commercial banks is seeing robust growth, with the share of total real estate loans delivered by the Saudi banks to their retail and corporate customers, as a percentage of total bank credit, increasing on a quarterly basis. More consumers are therefore keen to expend their bank credit loans on purchasing real estate.
Owing to its commitment to support the fintech sector, the Saudi Central Bank (SAMA) has granted online platform Tamara a permit to provide buy now pay later (BNPL) solutions pursuant to Saudi Central Bank Law and Finance Companies Control Law. With Tamara, there are now four authorised companies offering BNPL solutions in the Kingdom – further quickening the Kingdom’s plans to become a regional fintech hub.
Banks in Saudi continue to close down some physical branches in the territory, despite offering more loans to customers. However, this is not due to cost-cutting measures, but rather a strategic move towards the evolution of online and digital banking.
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Consumer Lending
Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.
See All of Our DefinitionsThis report originates from Passport, our Consumer Lending research and analysis database.
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