Saudi mortgages grow sharply by 65% to $1.8bln in May: Al Rajhi

Saudi mortgages grow sharply by 65% to $1.8bln in May: Al Rajhi

Saudi Arabia mortgages grew sharply by 65% in May to SR6.8 billion ($1.8 billion), a smart recovery from April’s SR4.1 billion, according to Al Rajhi Capital Research. “In our view, non-REDF (Real Estate Development Fund) category has remained resilient and is driving the mortgage demand.” Corporate loan Further, corporate loan growth was also strong as total credit was up almost 12% y-o-y and 1.4% m-o-m. On the other hand, demand deposits continue to decline, while time deposits inflow remain strong. Despite the rising funding pressure, profitability for May was solid implying the banks are passing on the high interest costs to the end consumer, said Al Rajhi citing the Saudi Arabian Monetary Authority (SAMA) banking data. “We continue to believe interest rates will remain higher for longer period time than implied by the consensus, thus maintain our positive view on the corporate banks,” Al Rajhi said. Credit Credit growth for May came in strong growing at +1.4% m-o-m and +11.8% y-o-y (April: 0.3% m-o-m and +11.1% y-o-y). Bank lending to the private sector grew 1.3% m-o-m in May and grew 10.3% y-o-y (April: 0.3% m-o-m and +9.7% y-o-y). Deposits Deposits contracted for May (-0.7% m-o-m, +9.8% y-o-y), led by a