Riyadh-Mubasher: Saudi Arabia’s banks able to overcome the impact of lower oil prices on adequate capital and lower non-performing loans (NPLs) along with higher liquidity, Albilad Capital said in a recent report.

The Federal Reserve Bank may tighten its monetary policy in the fourth quarter of 2015, which may bode well for the credit margins of Saudi banks, given that demand deposits constitute 67% of total deposits, the research firm said.

It added that Saudi credit growth is predicted to slow down in 2015, compared to 2014, driven by the impacts of low oil prices.

The Saudi government has returned to the primary bonds market; a step aiming to lure SAR 100 billion by the end of the year, constituting 5.9% of banking deposits.

The step will also precede an expected upward shift in the U.S. interest rates, and this will help control liquidity in the local market.

“Government accounted for 21.3% of the total sector deposits at the end of September of 2015. We don’t expect lower government deposits in Q3-15 to have a material impact on the banking sector,” Albilad said.

The banks’ aggregate net income climbed 5.4% year-on-year in the first nine months of 2015, coming in at SAR 33.56 billion.

Total assets surged by 6.9% year-on-year to reach SAR 2,175 billion.

Net loans and financing grew 7.1% to SAR 1,336 billion during the same period, while deposits rose by 6.7% to SAR 1,702 billion.