Riyad Bank
Small and medium-sized enterprises are at the heart of Saudi Arabia’s Vision 2030, which aims to transform a creaky economy that is overly dependent on oil revenues to one driven by lithe and innovative businesses run by a new generation of entrepreneurs. In March 2020, the government said it would extend SR50 billion ($13.3 billion) in financial aid to help SMEs weather the pandemic.
The country has a lot of SMEs, and 99% of them are privately run, but too many lack ambition and capital; according to data from Castlereagh Associates, 20% of Saudi GDP is generated by small businesses, against 53% in the UAE.
This is where Riyad Bank, the country’s third-largest lender by assets, comes in. Under the leadership of chief executive Tariq Al-Sadhan, the lender has invested heavily in serving SMEs. In 2019, the bank added four new offices and centres dedicated solely to serving SMEs, taking the total to 21, in 15 towns and cities.
Total income generated by the bank from these small businesses rose 42% in 2019, year on year, after provisions. In the first quarter of 2020, income from the SME segment was up 16% on an annualized basis, and the number of small firms the bank serves jumped 20.4% over the same period, despite the pandemic.
From the start, Riyad Bank championed the Kafalah programme, a fund supported by the finance ministry and designed to accelerate the flow of financing to small businesses. New lending completed via Kafalah increased 45% year on year in 2019, making Riyad Bank the most active participant in the programme for the third year in a row.
The bank continues to invest and innovate, rolling out services across the country. Last year, it streamlined its SME underwriting process, cutting the turnaround time to 14 days for any firm seeking to borrow working capital, against 42 days in 2016.