The annual growth in Saudi Arabia's M3 money supply slowed in February for a fifth straight month, central bank data showed on Wednesday. M3, one factor potentially influencing inflation, grew 5.6 percent in February year-on-year, down from 8.3 percent in January, due mainly to a near 10 percent drop in time and savings deposits, data published by the Saudi Arabian Monetary Agency (SAMA) showed. Demand deposits, a more liquid component of M3, rose by almost 21.6 percent in February year-on-year. Inflation in Saudi Arabia accelerated to an annual 4.6 percent in February, its highest level since June and up from 4.1 percent in January after a rise in food costs. SAMA said last month that housing will keep inflation rising during the first quarter but a stabilization in food prices will keep it below the 1.5 percent recorded in the previous quarter. SAMA data showed however that bank claims on the private sector rose by an annual 1.6 percent in February to SR742.1 billion, and up 0.9 percent from January, their highest month-on-month jumps since August. The growth in bank claims on the private sector, which also includes investments in private securities, measures lender confidence in the economy's prospects. Bank credit to the private sector, which excludes bank investment in private securities, rose by an annual 0.6 percent in February to SR714.2 billion up from less than 0.1 percent in January. Saudi bank credit growth was flat throughout much of 2009 due to global turmoil and after defaults by local family firms. An annual decline in SAMA's net foreign assets fell to about 2 percent in February from 5 percent in January. These stood at SR1.553.7 trillion in February up from SR1.535.4 trillion in January and SR1.584.8 trillion in February 2009. SAMA has said it started drawing on reserves accumulated during years of high oil prices to keep the economy going. Meanwhile, profits generated by Saudi commercial banks, including the 11 listed ones, fell about 14.8 percent in the January-February period, central bank data showed on Wednesday ahead of first-quarter earnings announcements. Excluding branches abroad, Saudi banks made a profit of SR5.16 billion ($1.38 billion) during the first two months of 2010, according to the Saudi Arabian Monetary Agency's (SAMA) website. SAMA did not indicate whether the data referred to net profit and described it only as cumulative profit. Saudi-listed firms are due to start publishing first quarter earnings next month.
