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 SAMA : SIMAH works to reduce financial risks
9/3/2020

Saudi Arabian Monetary Authority ( SAMA)  , central bank of Saudi Arabia, has issued  the 56th Annual Report   which reviews the latest developments in the Saudi economy during fiscal year 1440/41H (2019). The Report covers developments in various areas of the domestic economy, including monetary developments, banking activity, capital market, prices, public finance, national accounts, foreign trade and balance of payments. It also provides an overview of the latest economic developments in various domestic productive sectors, apart from giving a full description of SAMA’s functions, such as setting and managing monetary policy and supervising banking, insurance and finance sectors. In addition, the Report includes the auditors’ report on SAMA’s balance sheet for fiscal year ended on June 30th, 2019. In addition to data issued by SAMA, the Report mainly relies on official data obtained from ministries, government departments and public entities, to which I would like to extend my sincere thanks for their cooperation in providing valuable information and data that enabled SAMA to prepare this Report. I also would like to thank all SAMA’s staff for their efforts in preparing this Report and in carrying out all functions entrusted to SAMA.


Specialized Credit Institutions (SCIs) continued to provide loans that contribute to the achievement of the development objectives in Saudi Arabia. Latest statistics indicate that the actual loans disbursed by SCIs in 2018 totaled SAR 15.2 billion, decreasing by 17.5 percent, compared to SAR 18.4 billion in 2017. Total loan repayments amounted to SAR 20.7 billion, decreasing by 2.3 percent from 2017. The balance of outstanding loans went down by 2.6 percent at the end of 2018 to SAR 230.7 billion compared to the end of the preceding year.

Consumer and credit card loans extended by banks went up by 4.7 percent to SAR 352.5 billion at end- 2019 compared to SAR 336.6 billion at end-2018. Retail and corporate real estate loans extended by banks continued their growth to SAR 297.4 billion, increasing by 24.7 percent (SAR 58.8 billion) in 2019, compared to a 2018 growth rate of 13.1 percent (SAR 27.6 billion). Retail real estate loans recorded a rise of 41.2 percent (SAR 57.8 billion)
to SAR 198.1 billion, compared to an increase of 15.7 percent (SAR 19 billion) in the preceding year, accounting for 66.6 percent of total real estate loans at end-2019. Corporate real estate loans extended by commercial banks also rose by 1.0 percent (SAR 1 billion) to SAR 99.3 billion in 2019, compared to a 2018 growth of 9.5 percent (SAR 8.5 billion), accounting for 33.4 percent of total real estate loans.

According to SAMA’s report , the number of commercial banks operating in Saudi Arabia at end-2019 stood at 29 (including branches of foreign banks) as two new banks were licensed to engage in banking activities in the country. Moreover, two other foreign banks were licensed to open more branches (21 branches) in Saudi Arabia. The number of commercial banks’ branches increased to 2,076, with 12 new bank branches beginning operations in Saudi Arabia. The distribution of bank branches by administrative regions shows that the Riyadh region accounted for 626 branches (30.2 percent of total bank branches), Makkah region 442 branches (21.3 percent), the Eastern Region 408 branches (19.7 percent), the Asir region 128 branches (6.2 percent), Al-Qassim region 120 branches (5.8 percent), and Al-Madinah region 104 branches (5.0 percent). 

SAMA’s annual report points out that the Saudi Credit Bureau (SIMAH) continued to improve its services and products provided to all relevant entities during 2019, particularly the consumer  system “SIMATI”, the commercial  system “SIMAT”,   “Shaiki” project, and SMEs evaluation system project “TAQEEM”. Through these services and products, SIMAH aims to provide the necessary and accurate credit information that contributes to enhancing risk assessments, evaluating the creditworthiness of borrowers, and reducing financial risks. SIMAH continued to meet the goals for which it was established as an independent credit information body. Such goals include the following: (1) to complement the finance ecosystem in Saudi Arabia and (2) to develop the credit information sector and its various services in preparation for the expansion of the credit market in Saudi Arabia according to the economic environment and Saudi Vision 2030.

“ During 2019, SIMAH continued to find the necessary means to develop SIMAT and improve its services. In line with SAMA’s standards, SIMAH introduced a number of enhancements to corporate credit reporting, which included expanding the collateral list, enabling the preview of overall credit facility information, and introducing the “shared limit” concept for facilities in order to have a calculation suite for all possible uses of credit facilities as agreed between the financier and the borrower” SAMA’s annual report highlights . Furthermore, SIMAH allowed its members to link their account with one or more specified projects. The linkage helps financiers review and assess the positions and creditworthiness of companies and make a sound decision regarding the financial soundness and credit worthiness of such companies. In addition, SIMAH made enhancements to the way in which credit information is presented in credit reports and increased quality standards to reduce potential errors.

In order to serve the corporate sector at the GCC level, SIMAH further developed SIMAT by initiating the GCC credit information linkage project. It completed all the technical requirements for linkage through the e-government program “YESSER” in 2019 in preparation for the program’s actual launch in 2020. In 2019, SIMAH carried on providing credit performance comparison reports, which enable financial institutions to support private sector growth, thus achieving the objectives of the Financial Sector Development Program (FSDP) according to Vision 2030. The reports consider actual challenges that creditors face, the most important of which are the approved credit strategies, marketing plans and credit risk management. These reports also enable creditors to compare their credit performance with their counterparts in the same sector in the market.

SAMA’s clarifies that  In terms of technological advancement, SIMAH is still working on developing electronic linkage systems, including improving the electronic linkage with the Ministry of Justice (MOJ). Through this linkage, the MOJ can obtain the information sufficient for settling enforcement courts’ cases. In addition, SIMAH launched in 2019 the registration in SIMAH services through the National Single Sign On (SSO) service, with the aim of simplifying procedures that come before obtaining a report and to facilitate access to credit reports and to all other services and products for individuals. As regards credit education, SIMAH contributed to promoting credit awareness among all segments of society in 2019. It continued to print and distribute copies of the “Procedural Manual for Customer Awareness” that was approved by SAMA in 2018, in addition to publishing it on SIMAH’s website. The manual is aimed at raising customers’ awareness of their credit rights stipulated by the Credit Information Law and its Implementing Regulations.