Focus on housing, SMEs main drivers of growth

RIYADH — Saudi Arabia’s efforts to stimulate the private sector and develop the housing market will be the main drivers of growth, according to experts. Earlier this year, Saudi authorities outlined ambitious plans to diversify the economy of the world’s top oil exporter away from hydrocarbons. The reform agenda includes tripling the government’s non-oil revenues by 2020 and raising the proportion of Saudis who own their own homes in that timeframe by 5 percentage points to 52 percent. In September, Al Rajhi — the Kingdom’s largest Islamic bank — announced it had agreed with the Ministry of Housing to become the first Saudi bank to participate in a new government scheme to increase home ownership. It will offer mortgages with the state funding part of the down-payment. Al Rajhi’s SME business was moved to a specialist entity within the bank at the end of last year. The bank has traditionally focused on consumer banking, from which it derives 70 percent of its SR330.5 billion ($88 billion) of assets and between 55 and 60 percent of its revenues. “We want to diversify our retail revenues but also between retail and the rest of the bank, so hopefully by 2020, we want to improve the mix,” Steve Bertamini said in his first interview with international media since taking over as chief executive of Al Rajhi in May 2015. “If we can capture a disproportionate share of the housing market growth that’s expected, and a disproportionate share of the SME (small and medium-sized enterprises) growth... Plus these people are also consumers so you can bank both sides.”