Letters of credit provided by Saudi banks have surged to one of their highest levels over the past months on the back of strong economic performance and are set to reach a record high in 2012, a key bank said on Tuesday. Saudi Arabia’s economy, the largest in the Middle East, recorded one of its highest growth rates of 6.8 per cent in 2011 due to strong crude prices, minimal exposure to global turmoil, and buoyant business activity and optimism, National Commercial Bank (NCB) said in a study sent to Emirates 24/7. “As one of the main indicators in the private sector, Letters of Credit (LCs) through commercial banks blossomed last year alongside growing domestic demand….moving forward, LCs accelerated to record exceptional levels during the first two months of 2012,” the study said. It showed settled LCs reached a total of SR41.3 billion during January and February, soaring by around 26.6 per cent over the same period last year. The highest growth was attributed to food grains by 70.1 per cent albeit a marginal decrease of 3.9 per cent for foodstuff, it said. Additionally, building materials and machinery posted robust growth during February at 81.3 and 24.6 per cent Y/Y, respectively. The report said the main driver of growth was large activity in construction projects as witnessed by NCB’s Construction Contracts Index which reached a record high at 453.6 points. Looking ahead, newly opened LCs have jumped by 42.1 per cent year to date on an annual basis, according to NCB. As an indicator of future business activity, newly opened LCs for motor vehicles gained as local distributors buildup their stock of new models, it said. Furthermore, while settled LCs for foodstuff stalled, newly opened LCs doubled to nearly SR3.8 billion year to date. “The Saudi economy provides the support needed for businesses to blossom, as such, we expect LCs to set new highs in 2012.”