Riyadh – Mubasher: Al Rajhi Capital estimates the size of untapped mortgage potential in Saudi Arabia at around SAR 500 billion ($133.3 billion), roughly a third of the current private-sector loan portfolio that totals SAR 1.5 trillion.
The research firm said that its calculations show about 1.22 million homes are likely to be constructed from 2020 to 2030 for achieving Vision 2030 penetration target of 70%, with the current run rate is near 180,000 homes in 2019, and is estimated to increase to 190,000 per year for the next three years.
“We believe it is important to look at mortgage loans as % of Interest-Earning Assets (IEA), rather than as % of the loan, as some banks have large non-loan IEA. By this metric we have observed that Al Rajhi, Riyad, Aljazira have the highest weights in the same order,” the report noted.
Al Rajhi Capital further explained that assuming an increase in the mortgage market next year by SAR 80 billion, it estimates that mortgage could add about 5% of the TTM profits to the sectors bottom line in 2020.
“There could also be a spillover effect on allied sectors, such as building materials, which could further aid loan growth,” the report further added.
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