Saudi Arabia's banks need to resume normal lending to take advantage of soaring deposits and better economic conditions in the Kingdom, National Commercial Bank (NCB) said Tuesday. "The highly liquid stance of the banking industry in the Kingdom surely provides ample lending opportunities that are yet to be grasped...as Saudi banks weathered the aftermath of the financial crisis, this marks the second year of a still highly liquid state," NCB said. The risk-averse environment of 2010 prompted the country's 12 commercial banks to maintain favorable liquidity positions moving into 2011, NCB noted. Moreover, "Saudi banks will need to redeploy these liquid assets, as the economy has proved to be resilient to external shocks...coupled with the recent royal decrees, and expected approval of the mortgage law, banks need to shift from amassing liquidity to expanding their loans portfolios," NCB said. Bank deposits expanded by 11 percent in the first quarter of 2011 on an annual basis to reach an all time high of SR1072.5 billion ($286 billion) while loans only grew by 3.4 percent over the same period to reach SR763.5 billion ($204 billion). NCB said the relatively tighter lending criteria pushed deposits to expand at a much faster rate than loans, thereby reducing the loans-to-deposits (L/D) ratio to a six-year low of 71.1 percent at the end of the first quarter. NCB or Al-Ahli Bank is the largest bank in terms of capital in the Arab world. The bank's CEO, Abdulkareem Abu Alnasr, has been named as Saudi Arabia's "Banker of the Year 2009" by the World Finance Magazine, and also the “Islamic Banker of the Year 2010” at the World Islamic Banking Conference held in Bahrain. NCB this year received two separate prestigious awards from CPI Financial Group 'Banker Middle East' and 'Euromoney' as "The Best Bank in Saudi Arabia in 2011". The respective recognitions confirm and consolidate our leadership position in the banking industry in Saudi Arabia. "The criteria for both awards recognized our strong financial performance during 2010 and the first quarter of 2011, our ongoing commitment to a well-defined business strategy and the impressive growth in assets, revenues and profitability in the current difficult global market conditions," NCB said in a statement Tuesday. 'Euromoney' and 'Banker Middle East' are highly specialized and credible financial publications and their awards are considered among the most prestigious in the banking industry both internationally and regionally respectively. The Saudi Arabian Monetary Agency (SAMA) said in its monetary data for the month of May that the L/D ratio increased to 73.2 percent. "This suggests that banks are gradually easing their lending criteria and eying new opportunities." From SR1,806.7 billion ($482 billion) at the end of April, total foreign assets controlled by SAMA soared to a record high of SR1,856.2 billion ($495 billion) at the end of May, SAMA said in its monthly bulletin for May. A breakdown showed SAMA's deposits with banks abroad grew from around SR344.5 billion at the end of April to SR360.1 billion at the end of May. Investment in foreign securities swelled from SR1,267 billion to SR1,293.8 billion. Foreign currencies and gold gained around SR3billion to reach SR154.3 billion at the end of May compared with SR151.8 billion at the end of April. Other miscellaneous assets grew to SR24 billion from SR21.2 billion.
