Saudi banks to extend growth while embracing digital agenda: KPMG

Riyadh – Mubasher: Banks operating in Saudi Arabia will continue to grow over the coming period after posting a solid performance last year, KPMG said in a report on Wednesday.

The report, entitled “Embracing Digital”, tackled listed commercial banks across the GCC including Saudi Arabia’s banking sector during the full-year 2018.

The kingdom’s banking sector witnessed positive results during the year ended 31 December 2018 with an average of 11.3% growth in net profit, and 2.1% growth in total assets.

“Overall 2018 was a positive year for listed banks in Saudi Arabia. Average net profitability improved, underpinned by higher average SAIBOR rates, modest growth in assets and a slight decrease in costs,” Muhammad Tariq, the head of Financial Services at KPMG Al Fozan & Partners in Saudi Arabia, commented.

Tariq added that credit quality remained an area of focus across the sector.

Loan impairment charges levelled up 14.8% year-on-year in 2018, the report said.

“Accounting standards, Basel III requirements, and an increasing focus on Anti Money Laundering (AML) and Know Your Customer (KYC) requirements will not only maintain regulatory pressure, but will also require banks to reshape strategies to ensure compliance while retaining agility,” the report highlighted.

Tariq noted that Saudi banks have to continue to innovate their practices and digitise their processes in a bid to differentiate themselves in a competitive market and remain relevant.

“Financial institutions and SAMA are showing greater support for the FinTech sector, through various initiatives such as Fintech Saudi and the Sandbox regulatory environment. FinTech solutions have the potential to lower barriers of entry to the financial services market; and elevate the role of data as a key commodity to enhance the customer experience,” Tariq said.

It is worth mentioning that KPMG in Saudi Arabia plans to complement this “GCC listed banks' results” report with the launch of our first edition of the “KSA Banking Perspectives” report in July.

The report will investigate the key issues and trends influencing the global banking industry, and in the context of KSA.