JEDDAH: Lending by Islamic banks grew by 17.9 percent in 2021 — the highest annual rate on record, according to data released by the Saudi Central Bank also known as SAMA.
Total financing provided by Islamic banks amounted to SR1.72 trillion ($459 billion) in 2021, whereas loans issued by the Kingdom’s conventional banks reached SR2.06 trillion, which translates to an annual growth of 15.5 percent.
The financing provided by Islamic banks in the fourth quarter of 2021 totaled SR110 billion, indicating a quarter-on quarter increase of 4.8 percent. This compares to a 2.5 percent growth for the conventional banks over the same period.
Looking at the structure of financing provided by the Saudi Islamic banks, Murabaha reached SR779 billion at the end of 2021. The amount in this mode of financing keeps growing at the fastest rate, compared to other Shariah-compliant structures. For example, in 2021 it grew 38.4 percent year-on-year compared to 16.5 percent and 9.8 percent for Tawwaruq and Ijara, respectively.
The value of Murabaha financing in the fourth quarter totaled SR30.5 billion ($8.1 billion), which reflects a quarter-on-quarter increase of 4.1 percent. This compares with SR46 billion, or 6.6 percent quarter-on-quarter for Tawwaruq, and a decrease of 8.1 percent for Ijara. For the latter, the total value of financing fell by SR15 billion at the end of 2021 to SR169.4 billion.
The share of Murabaha in the total value of financing at the end of 2021 was 45.2 percent, up from 38.5 percent in 2020. The share of Tawwaruq remained virtually unchanged, while the share of Ijara fell to 9.8 percent from 15.8 percent in 2021.
In 2021, Islamic banks’ total assets grew by 18.2 percent year-on-year to SR2.41 trillion ($643.6 billion), the highest annual rate of growth on record. This compares to SR3.28 trillion ($874 billion) in total assets, and annual growth of 10 percent for conventional banks.
