Saudi banks’ force of lending is largely driven by the level of deposits they accumulate. Following rigorous rules and regulations set by SAMA (Saudi Arabian Monetary Agency), deposits are the main component in deriving the level of financing the bank can write on their balances.
Local banks have amassed large levels of deposits over the past couple of years and have been rather stringent in lending. This has pressured the loans-to-deposits ratio to as low as 74.8 percent during April last year. However, toward the end of 2011, Saudi banks have started to utilize the liquid situation and expand their loans portfolios.