Saudi banks have recorded the second-highest solvency ratio of the G20 at a level of 18 percent in Q1 2016, according to the latest International Monetary Fund (IMF) reports about solvency percentage of the banking systems in the G20 countries.
The IMF data showed the strength of the financial soundness of the Saudi banking sector indicators as compared to those of the G20.
With prudent policies of the Saudi Arabian Monetary Agency (SAMA), the Saudi banking sector managed to record the fifth-lowest country of the group in the ratio of expenses of non-performing loans to total loans.
SAMA indicated in its Financial Stability report 2016 that it continues to follow changes in the non-performing loans ratios in all economic sectors to ensure that lending practices are rational and safe.
The Saudi banking sector recorded second lowest level for the rate of non-interest expenses to the total income at 36 percent. China’s banking sector came in the first place at 34.2 percent, while the Argentine banking sector came third by 44.4 percent then followed by the Indonesian, Australian and Turkish financial sectors by 44.7 percent, 44.9 percent and 49.5 percent respectively.
Percentage of liquid assets to the short-term liabilities in the Saudi banking sector reached 26 percent in the first quarter of 2016, while the percentage of liquid assets to total assets reached 17.1 percent. The rate of interest margin to the gross income reached 66.5 percent.
The IMF data showed lower net provisions for the non-performing loans to the capital of the Saudi banking sector by 3.7 percent, thanks to the precautionary policies taken by SAMA during the recovery times to strengthen the provisions of the non-performing loans which recorded coverage ratio at 170 percent of the total non-performing loans ratio in 2015.
This was also a result of SAMA tendency for many years to promote the banking sector capitalization, which greatly contributed to the strength of the Saudi banking sector.
Non-performing loans expenses to total loans in the Saudi banking sector reached 1.2 percent while the British, Japanese and Argentinean banking sector reached 1.4 percent, 1.5 percent and 1.8 percent, respectively.
The Chinese banking sector recorded its lowest level in the index at 0.1 percent followed by the Canadian and Korean banking sector at 0.6 percent in each, then the Australian banking sector by 1 percent.
The German banking sector was ranked ninth by 2.3 percent, while the Italian recorded the highest levels in this index by 18 percent and the Russian banking sector by 6.2 percent.
In terms of the solvency ratio of the G20, Indonesia was ranked first at 20.6 percent. Germany came third with 17.96 percent, while the UK came fourth with 17.9 percent, which was followed by France with 17.1 percent.

Source: Arab News