RIYADH: Loans from finance companies to the Saudi mining and quarrying sector jumped 60% to SR237.1 million ($63 million) in the second quarter from SR148.2 million in the same quarter. period last year, data released by the Central Bank of Saudi Arabia, also known as SAMA, revealed.
Credit to the sector, which accounts for 1.4% of total finance company loan disbursements, increased by 45% from SR163.6 million in the first quarter.
“Mining and quarrying is a capital-intensive business. These companies would usually take greater payment facilities from banks or even through capital markets,” Jarmo Kotilaine, an economist and strategist specializing in the Gulf region, told Arab News.
The increase in lending could be attributed to increased interest from financial firms to diversify lending, but also from businesses to explore new sources of funding as credit conditions tighten, Kotilaine pointed out.
Credit to the transport and communications sector rose 10.9 percent to SR 1.9 billion in the second quarter from SR 1.7 billion in the quarter ending March.
Moreover, the sector posted the largest increase recorded since the first quarter of 2018, the first data recorded by the SAMA chart. It also more than doubled from SR 1.2 billion in the second quarter of 2021, constituting 10.8% of total lending in that quarter.
“I suspect something similar is happening with transport and communications. However, since we are talking about numbers returning to pre-COVID levels, this could reflect normalization or post-pandemic rebound,” Kotilaine added.
According to SAMA data, financial companies directed most lending during the second quarter to the building and construction sector at 24.4%, followed by trade at 22.2% and services at 16. 7%.
In addition, loan disbursements to the services sector increased by 7.6% to SR2.9 billion in the second quarter from SR2.7 billion between January and March.
Lending to building and construction activities increased by 6.28% to SR4.3 billion between April and June, compared to SR4 billion in the first quarter.
Trade loans increased 3.6% to SR3.9 billion in the second quarter from SR3.8 billion in the first quarter.
“Other” loans, which account for 11.7% of total loans, decreased by 26.7% to SR2.1 billion this quarter.
Similarly, loans to electricity, water, gas and health utilities decreased by 4.7% from SR 619.9 million to SR 590.6 million.
Overall, total lending by finance companies to non-retail economic activities remained almost the same, increasing by only 0.32%, from SR 17.5 billion to SR 17.6 billion. SR billion, the lowest growth rate in the last seven quarters.
The percentage reported in the story was calculated after rounding the values of the period under consideration.