"Total assets of Saudi banks have increased at 8.6 percent CAGR (compounded annual growth rate) in the past five years to some SR 1.6 trillion. The Kingdom's banks have steadily narrowed the gap with regional leader UAE and appear poised to overtake in the next three years, according to a report by Riyad Capital.Loans and deposits as a ratio of 2011 nominal GDP stood at 54 percent and 53 percent, respectively in Saudi Arabia as of July-2012, slightly lower than GCC peers with the exception of Oman. This suggests there is room for further balance sheet expansion across the sector, the report said. The system deleveraged since 2009 and only since H1, 2012 some new debt issues have come to market, namely Saudi British Bank and Banque Saudi Fransi. As such, the LDR (loan-to-deposit ratio) will likely remain around the 100 percent mark through 2013, Riyad Capital said in its report. Regionally only Qatar and Oman appear leveraged."

Click here to read the full article on Arab News