JEDDAH: Bank lending in Saudi Arabia is expected to accelerate in 2011, the chief of the Saudi Arabian Monetary Agency (SAMA) told Dubai-based Al Arabiya television in comments first broadcast Wednesday. Mohammed Al Jasser said he “is optimistic regarding the growth of the banking sector's activity in 2011,” adding that “bank lending is expected to accelerate this year.” Jasser said that banks in the Kingdom have been “subject to stress tests since 2005,” and that they “are fully capable of executing” Basel III requirements. Bank liquidity remains strong, Jasser added. “Basel III was set to fix the weakness revealed by the global financial crisis,” Al Jasser told Al Arabiya. Under Basel III, banks are required to gradually build up their capital cushions starting in 2013, and will have until 2019 to comply with the new rules. In terms of the real estate sector, Jasser said he “hopes” that the new mortgage is finalized soon. “Once it is issued it will contribute to mortgage funding, which would reflect positively on real estate rental prices,” he said. SAMA's governor had said last year he expected the mortgage law to be approved by end of 2010. The last official discussion held regarding the proposed mortgage law took place last summer. Slightly over half of the Saudi population relies on rental accommodation, Saudi investment bank NCB Capital said in a report last month, adding that pressures on financing demand “are likely to remain intense.” Jasser said inflation remains a source of worry for SAMA... despite the fact that “inflation rates have been decelerating.”
