Saudi British Bank MD David Dew says high loan growth in Saudi Arabia can be sustained
According to Saudi British Bank Managing Director David Dew, the high loan growth provided to the private sector in Saudi Arabia would most likely continue in the next three years. This was confirmed by the SBB managing director in an interview with Reuters.
Bank lending to the private sector had increased by 15% in August compared to figures obtained in 2012. The growth would most likely push SBB to raise its own funds for capital purposes as its loan book grows.
Dew said, in a rare interview with a head of a Saudi bank, "We do not see that range (of loan growth) in the mid teens as sustainable over the next two to three years because of the underlying growth of the economy and governnent revenues,"
The Saudi Arabian real gross domestic product growth was pegged at 5.1% in 2012 and 8.5% in 2011 when government spending helped avert proteests during the Arab Spring.
He added, "If you're going to maintain your capital adequacy ratios, which we are, you've got to grow your capital at least at the same rate as your loans. Instruments such as convertible bonds that will convert to equity or be written down in the event of breaches of ratios and so on, those are being issued with increasing regularity around the world and I think you will see them in Saudi Arabia."