Monetary and Banking Developments

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Monetary and Banking Developments

4th Quarter, 2013

Economic Research Department

Rabi'II, 1435H - February, 2013

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Contents

Page No

First: Monetary Developments 3

1.1 Money Supply 3

1.2 Monetary Base 4

1.3 SAMA’s Balance Sheet 4

1.4 Reserve Assets 5

Second: Monetary Policy 6

Third: Banking Developments 7

3.1 Bank Deposits 7

3.2 Commercial Banks' Assets and Liabilities 8

3.3 Commercial Banks' Foreign Assets and Liabilities 9

3.4 Commercial Bank Claims on the Private and Public Sectors 10

3.5 Commercial Banks' Reserves, Capital, Profits and Branches 12

3.6 Commercial Banks' Purchases and Sales of Foreign Exchange 12

3.7 Private Sector Imports Financed by Commercial Banks 14

3.8 Private Sector Exports Financed by Commercial Banks 15

Fourth: Banking Technology Developments 16

Fifth: Domestic Share Market Developments 17

Sixth: Investment Funds 18

Seventh: Specialized Credit Institutions 19

Eighth: Supervisory and Legislative Banking Developments during the fourth quarter of 2013

20 Ninth: Prominent Regulatory Developments in the Saudi Economy during the fourth Quarter of 2013 21

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1.2. Monetary Base

Monetary base rose by 12.5 percent (SAR 38.3 billion) to SAR 343.5 billion during the fourth quarter of 2013, compared to an increase of 2.9 percent (SAR 8.7 billion) during the preceding quarter. Monetary base, also, registered an annual decrease of 2.0 percent (SAR 7.1 billion) at the end of the fourth quarter of 2013.

A breakdown of the components of the monetary base indicates that currency in circulation outside banks went up by 2.9 percent (SAR 4.1 billion) to SAR 143.2 billion during the fourth quarter of 2013, compared to an increase of 0.1 percent (SAR 0.2 billion) during the preceding quarter.

Currency in circulation outside banks registered an annual increase of 7.5 percent (SAR 10.0 billion) at the end of the fourth quarter of 2013.

Banks’ deposits with SAMA increased by 25.3 percent (SAR 35.8 billion) to SAR 177.1 billion during the fourth quarter of 2013 as compared to an increase of 4.5 percent (SAR 6.1 billion) during the previous quarter. Banks’

deposits with SAMA registered an annual decline of 10.4 percent (SAR 20.6 billion) at the end of the fourth quarter of 2013. Cash in vaults recorded a decrease of 6.7 percent (SAR1.7 billion) to SAR 23.2 billion, compared to a rise of 10.6 percent (SAR 2.4 billion) during the preceding quarter. It registered an annual increase of 18.1 percent (SAR 3.5 billion) at the end of the fourth quarter of 2013.

1.3. SAMA’s Balance Sheet

Preliminary data of SAMA’s balance sheet indicate that total foreign assets rose by 3.2 percent (SAR 84.6 billion) to SAR 2,700.5 billion during the fourth quarter of 2013, compared to an increase of 2.7 percent (SAR 69.7 billion) during the previous quarter. Total foreign assets, also, registered an annual rise of 10.8 percent (SAR 263.8 billion) at the end of the fourth quarter

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0 500 1000 1500 2000 2500 3000

Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13

Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13

Total Assets 2,330.6 2,463.3 2,519.8 2,568.4 2,639.0 2,721.5

Foreign Currency and Deposits in

Banks Abroad 633.6 733.6 667.9 634.0 647.6 716.6

Investment in Securities Abroad 1,633.4 1,665.2 1,790.4 1,872.8 1,933.6 1,947.7

Chart 3: Reserve Assets (Billion Riyal)

A breakdown of the components of total reserve assets during the fourth quarter of 2013 indicates that the reserve position with the IMF stood at SAR 19.4 billion, decreasing by 4.2 percent (SAR 0.8 billion) from the previous quarter, whereas deposits abroad went up by 9.9 percent (SAR 64.8 billion) over the previous quarter to SAR 716.6 billion. Investments in securities abroad increased by 1.0 percent (SAR 19.4 billion) over the preceding quarter to SAR 1,947.7 billion. Special drawing rights (SDRs) balance rose by 0.4 percent (SAR 0.1 billion) over the preceding quarter to SAR 36.2 billion. Gold reserves stood at SAR 1,624 million.

Second: Monetary Policy

During the fourth quarter of 2013, SAMA continued to pursue a monetary policy aimed at achieving financial and price stability, supporting diverse economic sectors in line with domestic and international economic developments and supporting domestic banks to perform their financing role in the domestic economy. SAMA adopted during the fourth quarter of 2013 the same measures taken earlier in the preceding quarter— maintaining the Repo

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agreements rate at 2.0 percent and the Reverse Repo agreements rate at 0.25 percent. SAMA's daily average Repo agreements stood at SAR 74 million during the fourth quarter of 2013 against SAR 324 million in the preceding quarter.

Daily average Reverse Repo agreements totaled SAR 65.6 million in the same period compared to SAR 48.5 million in the previous quarter. In addition, SAMA maintained the Cash Reserve Ratio for demand deposits at 7.0 percent and time and savings deposits at 4.0 percent.

SAMA continued to maintain the rate of treasury bills at 80.0 percent of the interest rate of Saudi inter-bank bid rate (SIBID) and the ceiling for weekly subscription by banks for treasury bills at SAR 9 billion in order to encourage domestic banks to increase lending.

The three-month Saudi interbank offered rate (SIBOR) dropped to 0.92 percent at the end of the fourth quarter of 2013. The three-month interest differential between the Riyal and the Dollar was in favor of the Riyal, standing at 68 basis points at the end of the fourth quarter of 2013, compared to 70 basis points at the end of the preceding quarter.

Third: Banking Developments

3.1. Bank Deposits

Total bank deposits recorded a rise of 4.1 percent (SAR 55.8 billion) to SAR 1,402.0 billion during the fourth quarter of 2013 compared to a rise of 1.4 percent (SAR 18.7 billion) during the preceding quarter, recording an annual rise of 11.2 percent (SAR 141.4 billion) at the end of the fourth quarter of 2013. The ratio of total bank deposits to total broad money supply (M3) stood at 90.7 percent (Chart 4).

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0 100 200 300 400 500 600 700 800 900

Sep. 12 Dec.12 Mar. 13 Jun. 13 Sep. 13 Dec.13

Demand Deposits 693.0 754.0 805.6 823.1 825.8 857.3

Time & Savings Deposits 293.9 324.4 312.1 319.4 325.6 345.0 Other Quasi- Monetary Deposits* 193.1 182.2 174.1 185.0 194.7 199.7

Chart 4: Bank Deposits by Type (Billion Riyal)

A review of the components of deposits by type during the fourth quarter of 2013 indicates that demand deposits rose by 3.8 percent (SAR 31.5 billion) to SAR 857.3 billion compared to a rise of 0.3 percent (SAR 2.7 billion) during the preceding quarter, recording an annual rise of 13.7 percent (SAR 103.3 billion). Time and savings deposits went up by 6.0 percent (SAR 19.4 billion) to SAR 345.0 billion against an increase of 2.0 percent (SAR 6.3 billion) during the preceding quarter, recording an annual rise of 6.4 percent (SAR 20.6 billion). Other quasi-monetary deposits also went up by 2.5 percent (SAR 4.9 billion) to SAR 199.7 billion compared to a rise of 5.3 percent (SAR 9.7billion) during the preceding quarter, recording an annual rise of 9.6 percent (SAR 17.5 billion).

3.2. Commercial Banks' Assets and Liabilities

Total assets and liabilities of commercial banks stood at SAR 1,893.3 billion at the end of the fourth quarter of 2013, increasing by 3.1 percent (SAR 57.7 billion) compared to a rise of 1.5 percent (SAR 28.0 billion) in the preceding quarter and recording an annual growth rate of 9.2 percent (SAR 159.1 billion).

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3.3. Commercial Banks' Foreign Assets and Liabilities

Total foreign assets of commercial banks during the fourth quarter of 2013 decreased by 2.2 percent (SAR 4.7 billion) to SAR 210.7 billion compared to a rise of 0.7 percent (SAR 1.5 billion) during the preceding quarter, registering an annual decrease of 1.0 percent (SAR 2.1 billion) and constituting 11.1 percent of total commercial banks' assets compared to 11.7 percent at the end of the preceding quarter (Chart 5).

0 50 100 150 200 250

Assets 229.6 212.8 211.7 213.9 215.3 210.7

Liabilities 83.4 79.4 75.9 75.4 76.8 74.4

Net of Foreign Assets 146.2 133.4 135.8 138.5 138.5 136.3

Chart 5: Banks' Assets, Liabilities and Net Foreign Assets

(Billion Riyal)

Commercial banks' total foreign liabilities also went down by 3.2 percent (SAR 2.4 billion) to SAR 74.4 billion during the fourth quarter of 2013 against a rise of 1.9 percent (SAR 1.4 billion) in the preceding quarter, showing an annual decline of 6.3 percent (SAR 5.0 billion) and constituting 3.9 percent of commercial banks' total liabilities against 4.2 percent at the end of the preceding quarter. Commercial banks’ net foreign assets went down by 1.6 percent (SAR 2.3 billion) to SAR 136.3 billion at the end of the fourth quarter of 2013, compared to a rise of 0.01 percent (SAR 0.04 billion) during the preceding quarter.

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3.4. Commercial Bank Claims on the Private and Public Sectors

Commercial bank claims on the private and public sectors (bank credit and investments) went up by 1.8 percent (SAR 25.0 billion) to SAR 1,399.3 billion in the fourth quarter of 2013 compared to a rise of 1.8 percent (SAR 23.9 billion) in the preceding quarter. The claims recorded an annual rise of 14.4 percent (SAR 176.6 billion), representing 99.8 percent of total bank deposits at the end of the fourth quarter of 2013 compared to 102.1 percent at the end of the preceding quarter.

3.4.1. Commercial Bank Claims on the Private Sector

Bank claims on the private sector increased by 1.6 percent (SAR 17.9 billion) to SAR 1,123.6 billion during the fourth quarter of 2013 compared to a rise of 2.2 percent (SAR 23.8 percent) in the preceding quarter. Total bank claims on the private sector recorded an annual rise of 12.5 percent (SAR 124.5 billion) at the end of the fourth quarter of 2013, representing 80.1 percent of total bank deposits at the end of fourth quarter of 2013 compared to 82.1 percent at the end of preceding quarter (Chart 6).

3.4.2. Commercial Bank Claims on the Public Sector

Bank claims on the public sector went up by 3.0 percent (SAR 8.0 billion) to SAR 272.9 billion during the fourth quarter of 2013 compared to a decline of 0.3 percent (SAR 0.9 billion) during the preceding quarter. They recorded an annual increase of 23.6 percent (SAR 52.1 billion). The ratio of bank claims on the public and quasi-public sector to total bank deposits was 19.5 percent at the end of the fourth quarter of 2013, compared to 19.7 percent at the end of preceding quarter (Chart 6).

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0 200 400 600 800 1000 1200 1400

Public Sector 214.5 220.8 260.6 265.7 264.8 272.9

Private Sector 965.3 999.1 1034.4 1082 1105.8 1123.6 Chart 6: Bank Claims on Private and Public Sectors

(Billion Riyal)

An analysis of bank credit by maturity (extended to the private and public sectors) during the fourth quarter of 2013 indicates that short-term credit increased by 2.8 percent (SAR 16.6 billion) to SAR 603.3 billion compared to a rise of 2.6 percent (SAR 14.7 billion) in the preceding quarter. Also, medium-term credit rose by 4.3 percent (SAR 8.8 billion) to SAR 211.9 billion compared to an increase of 0.7 percent (SAR 1.3 billion) in the preceding quarter. However, long-term credit went down by 3.9 percent (SAR 12.6 billion) to SAR 305.2 billion compared to a rise of 2.9 percent (SAR 9.0 billion) in the preceding quarter.

3.4.3. Commercial Bank Claims by Economic Activity

Total bank credit by economic activity increased by 1.2 percent (SAR 12.8 billion) to SAR 1,120.5 billion during the fourth quarter of 2013 compared to a rise of 2.3 percent (SAR 25.1 billion) in the preceding quarter. It recorded an annual rise of 12.0 percent (SAR 120.5 percent) at the end of fourth quarter of 2013. A review of bank credit extended to economic activities during the fourth quarter of 2013 shows increases in the mining and quarrying sector by 19.2 percent (SAR 2.6 billion); the services sector by 6.9 percent (SAR 4.1 billion); the water, electricity and health services by 6.5 percent (SAR 2.1 billion); other sectors by 1.8 percent (SAR 7.5 billion); the commerce sector by 1.8 percent (SAR 4.0 billion) and the manufacturing production sector by 0.1 percent (SAR 0.1 billion). On the other hand, bank

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credit extended to the building and construction sector went down by 3.3 percent (SAR 2.6 billion), the agriculture and fishing sector by 2.3 percent (SAR 0.3 billion), the transport and communications sector by 1.7 percent (SAR 0.6 billion), the finance sector by 7.3 percent (SAR 2.2 billion) and the public and quasi-public sector by 4.3 percent (SAR 2.0 billion)

3.5. Commercial Banks' Reserves, Capital, Profits and Branches

Capital and reserves of commercial banks decreased by 0.5 percent (SAR 1.2 billion) to SAR 225.8 billion during the fourth quarter of 2013 compared to a decrease of 2.0 percent in the preceding quarter. Their ratio to total bank deposits stood at 16.1 percent at the end of the fourth quarter of 2013 compared to 16.9 percent at the end of the preceding quarter. Capital and reserves of banks denoted an annual growth rate of 7.8 percent (SAR 16.4 billion) in the fourth quarter of 2013. Banks' profits stood at SAR 7.5 billion at the end of the fourth quarter of 2013 compared to SAR 9.1 billion in the third quarter of the year, recording a fall of 17.6 percent (SAR 1.6 billion). They registered an annual rise of 15.6 percent (SAR 1.2 billion).

The number of commercial bank branches operating in the Kingdom during the fourth quarter of 2013 stood at 1,768, increasing by 33 over the preceding quarter.

3.6. Commercial Banks' Purchases and Sales of Foreign Exchange 3.6.1. Commercial Banks' Purchases of Foreign Exchange

Commercial banks' total purchases of foreign exchange rose by 3.5 percent (SAR 28.7 billion) to SAR 852.3 billion during the fourth quarter of 2013, compared to a rise of 0.05 percent (SAR 0.4 billion) during the preceding quarter, recording an annual rise of 19.1 percent (SAR 136.6 billion).

Purchases from customers went up by 26.3 percent (SAR 16.3 billion), from domestic banks by 5.4 percent (SAR 9.9 billion), from foreign banks by 4.6 percent (SAR 18.1 billion) and from SAMA by 3.2 percent (SAR 4.2 billion).

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In contrast, purchases from other sources decreased by 41.4 percent (SAR 19.8 billion) (Chart 7).

3.6.2. Commercial Banks' Sales of Foreign Exchange

Commercial banks' sales of foreign exchange rose by 8.3 percent (SAR 60.2 billion) to SAR 786.7 billion during the fourth quarter of 2013, compared to a decline of 5.3 percent (SAR 40.9 billion) during the preceding quarter. The sales recorded an annual increase of 11.7 percent (SAR 28.3 billion) during the fourth quarter of 2013. Comparing banks’ total sales of foreign exchange during the fourth quarter of 2013 to the preceding quarter, sales to government agencies rose by 42.8 percent (SAR 1.3 billion), to SAMA by 30.3 percent (SAR 0.1 billion), to banks within the Kingdom by 18.1 percent (SAR 28.1 billion), to other clients in the Kingdom by 9.7 percent (SAR 9.9 billion) and to banks abroad by 6.9 percent (SAR 24.4 billion). However, sales of foreign exchange to money changers fell by 21.8 percent (SAR 0.4 billion) (Chart 7).

0 100 200 300 400 500 600 700 800 900

Purcheses 731.1 715.6 735.9 823.1 823.5 852.3

Sales 751.4 704.5 702.9 767.5 726.6 786.7

Chart 7: Banks' Foreign Currency Purcheses and Sales

(Billion Riyal)

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3.7. Private Sector Imports Financed by Commercial Banks

Imports of the private sector financed through commercial banks by settled letters of credit and bills for collection recorded a decrease of 6.5 percent (SAR 4.1 billion) to SAR 59.8 billion during the fourth quarter of 2013, compared to a rise of 0.8 percent (SAR 0.5 billion) in the preceding quarter, recording an annual decline of 5.0 percent (SAR 3.1 billion). Imports of other goods increased by 0.4 percent (SAR 0.1 billion). In contrast, foodstuffs imports declined by 20.9 percent (SAR 1.9 billion), vehicle imports by 8.8 percent (SAR 1.3 billion), appliance imports by 1.7 percent (SAR 0.02 billion), textiles and clothing by 7.2 percent (SAR 0.1 billion), construction materials by 6.2 percent (SAR 0.3 billion) and imports of machinery by 12.6 percent (SAR 0.6 billion).

Private sector's imports financed through commercial banks by new opened letters of credit recorded a rise of 12.7 percent (SAR 5.9 billion) to SAR 52.2 billion during the fourth quarter of 2013, compared to a decrease of 4.9 percent (SAR 2.4 billion) in the preceding quarter, recording an annual rise of 4.4 percent (SAR 2.2 billion). Imports of other goods increased by 28.0 percent (SAR 5.1 billion), vehicle imports by 11.9 percent (SAR 1.3 billion), machinery by 10.1 percent (SAR 0.4 billion), textiles and clothing imports by 7.5 percent (SAR 0.04 billion), and construction materials by 6.0 percent (SAR 0.2 billion). However, foodstuffs imports decreased by 17.8 percent (SAR 1.2 billion), and imports of appliances by 4.5 percent (SAR 0.05 billion) (Chart 8).

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0 10 20 30 40 50 60 70

New Open Letters of Credit 47.1 50.1 55.8 48.7 46.4 52.2

Settled Letters of Credit and Bills for

Collection 62.6 63 63.2 63.4 63.9 59.8

Chart 8: Private Sector's Imports Financied by Banks (Billion Riyal)

3.8. Private Sector Exports Financed by Commercial Banks

The private sector's exports financed through commercial banks by opened letters of credit increased by 5.1 percent (SAR 1.9 billion) to SAR 40.0 billion during the fourth quarter of 2013, compared to a rise of 0.01 percent (SAR 0.01 billion) in the preceding quarter, recording an annual rise of 17.9 percent (SAR 6.1 billion). Financing exports of chemicals and plastics increased by 12.5 percent (SAR 0.2 billion), other industrial products by 5.2 percent (SAR 1.8 billion), and agriculture and livestock production by 0.2 percent (SAR 5.8 billion) (Chart 9).

A review of the geographical distribution of opened letters of credit by countries receiving exports during the fourth quarter of 2013 indicates a rise in the financing of exports to North America by 211.7 percent (SAR 0.05 billion) and the GCC countries by 123.8 percent (SAR 9.5 billion). In contrast, the financing of exports to other European countries dropped by 1.0 percent (SAR 0.01 billion), Arab countries by 0.7 percent (SAR 0.01 billion), the countries of Western Europe by 41.5 percent (SAR 0.5 billion), Latin America by 59.4 percent (SAR 0.6 billion), and other countries by 26.0 percent (SAR 6.5 billion).

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0 10 20 30 40 50

Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13

Open Letters of Credit 36.4 34.0 41.1 38.1 38.1 40.0

Settled Letters of Credit 10.5 11.8 12.3 12.4 11.5 12.5

Fourth: Banking Technology Developments

4.1. Saudi Riyal Inter-bank Express System (SARIE)

Statistics of SARIE show that the value of transactions in the fourth quarter of 2013 totaled SAR 11.7 billion (nearly $3.1 billion) through 2.0 million messages involving 15.3 million transfers carried out through SARIE.

The value of single payment transactions totaled SAR 11.3 billion, whereas the total value of gross payment transactions stood at SAR 0.4 billion. Customers’

payments stood at SAR 1.2 billion, increasing by 12.9 percent over the preceding quarter. The total value of inter-bank payments transactions stood at SAR 10.5 billion.

4.2. Saudi Payments Network (SPAN)

As for SPAN developments, the total number of transactions executed via ATMs during the fourth quarter of 2013 was about 337 million with cash withdrawals totaling SAR 164.5 billion, including transactions through banks’

network and SPAN. Total transactions executed through POS terminals stood at 77.7 million with total sales of SAR 35.0 billion during the fourth quarter of 2013. The number of ATMs totaled 13,883 and the number of ATM cards issued by domestic banks stood at about 17.8 million at the end of the fourth quarter of 2013. The number of POS terminals exceeded 107.8 thousand at the end of the same quarter.

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4.3. Clearing

The number of bank checks (outgoing and incoming) cleared at the clearing houses in the fourth quarter of 2013 totaled 1.7 million with a total value of SAR 229.9 billion. The number of individual and corporate checks totaled 1.6 million with a total value of SAR 164.9 billion, and the number of certified checks totaled 207.6 thousand with a total value of SAR 65.0 billion during the same period.

Fifth: Domestic Share Market Developments

The general share price index went up at the end of the fourth quarter of 2013 by 7.2 percent to 8,535.6 points compared to a rise of 6.3 percent in the preceding quarter, recording an annual increase of 25.5 percent. The number of traded shares decreased by 12 percent to 11.0 billion compared to an increase of 19.7 percent in the preceding quarter, while the number of annual traded shares fell by 0.5 percent. Total value of traded shares went down by 6.3 percent to SAR 294.5 billion in the fourth quarter of 2013 compared to a decline of 20.0 percent in the preceding quarter, recording an annual decrease of 5.8 percent.

At the end of the fourth quarter of 2013, the market capitalization of shares went up by 10.5 percent to SAR 1,753 billion against an increase of 5.9 percent in the preceding quarter, recording an annual rise of 25.2 percent. Total number of transactions executed in the fourth quarter of 2013 dropped by 14.8 percent to 5.2 million compared to a decrease of 28.1 percent in the preceding quarter, recoding an annual fall of 32.8 percent (Chart 10).

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Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Share Market Index 6839.83 6801.22 7125.73 7496.57 7964.91 8,535.6 Value of Traded Shares 369919.73 312675.35 368494.67 392319.33 314303.00 294549.02

0.00 50000.00 100000.00 150000.00 200000.00 250000.00 300000.00 350000.00 400000.00 450000.00

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Chart 10: Share Market Index

Million Riyal Points

Source :tadwul -CMA

Sixth: Investment Funds

Total assets of investment funds managed by investment companies went down by 0.2 percent (SAR 0.2 billion) to SAR 103.2 billion in the fourth quarter of 2013 compared to an increase of 3.1 percent (SAR 3.1 billion) in the previous quarter, recording an annual growth rate of 17.2 percent (SAR 15.1 billion).

An analysis of the total assets of the funds indicates that domestic assets increased by 3.3 percent (SAR 2.6 billion) to SAR 81.9 billion in the fourth quarter of 2013, compared to a rise of 1.6 percent (SAR 1.3 billion) in the preceding quarter. Domestic assets registered an annual increase of 17.3 percent (SAR 12.1 billion). However, foreign assets dropped by 11.6 percent (SAR 2.8 billion) to SAR 21.3 billion during the fourth quarter of 2013 against a rise of 8.3 percent (SAR 1.8 billion) in the preceding quarter, recording an annual rise of 16.8 percent (SAR 3.1 billion).

The number of subscribers to investment funds fell by 1.3 percent (3,434) to 258.1 thousand in the fourth quarter of 2013 compared to a decline of 1.5 percent (3,968) in the preceding quarter. The number of subscribers recorded an annual fall of 6.3 percent (17,514). The number of operating funds

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rose by 2.9 percent (7 funds) to 236 during the fourth quarter of 2013 compared to 243 in the previous quarter.

Seventh: Specialized Credit Institutions

The specialized credit institutions’ total outstanding loans went up during the second quarter of 2013 by 3.0 percent (SAR 7.8 billion) to SAR 265.8 billion, compared to an increase of 3.5 percent (SAR 8.8 billion) in the preceding quarter, recording an annual rise of 18.2 percent (SAR 40.9 billion) at the end of the fourth quarter of 2013.

Total actual loan disbursements declined by 13.1 percent (SAR 1.8 billion) in the second quarter of 2013 compared to a decrease of 32.6 percent (SAR 3.3 billion) in the preceding quarter, recording an annual decrease of 13.7 percent. Total loan repayments to the specialized credit institutions went down by 8.3 percent (SAR 0.4 billion) in the second quarter of 2013 compared to a decline of 6.9 percent (SAR 0.3 billion) in the preceding quarter, registering an annual increase of 23.7 percent. Net credit by the specialized credit institutions went down by 15.4 percent (SAR 1.4 billion) in the second quarter of 2013 compared to a rise of 66.5 percent (SAR 3.6 billion) in the preceding quarter, recording an annual decline of 25.4 percent.

A breakdown of credit granted by the specialized credit institutions shows that the loan disbursements by the Agriculture Development Fund increased by 24.4 percent (SAR 0.04 billion) in the second quarter of 2013 compared to a decrease of 30.0 percent (SAR 0.07 billion) in the preceding quarter. In contrast, disbursements by the Saudi Credit and Savings Bank decreased by 0.1 percent (SAR 0.001 billion) in the second quarter of 2013 compared to a decrease of 0.6 percent (SAR 0.01 billion) in the preceding quarter. Disbursements by the Saudi Industrial Development Fund went down by 36.7 percent (SAR 0.2 billion) in the second quarter of 2013 compared to a decline of 54.9 percent (SAR 0.6 billion) in the preceding quarter. Repayments

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to the Saudi Credit and Savings Bank decreased by 16.0 percent (SAR 0.2 billion) compared to an increase of 12.9 percent (SAR 0.1 billion) in the preceding quarter. Repayments to the Real Estate Development Fund went up by 19.5 percent (SAR 0.09 billion) in the second quarter of 2013 compared to a decline of 37.2 percent (SAR 0.3 billion) in the preceding quarter.

Eighth: Supervisory and Legislative Banking Developments

SAMA issued a number of circulars during the fourth quarter of 2013, as follows:

• Circular No. 341000134319 dated 25/11/1434H pertaining to updating tariffs on personal banking accounts and services that banks may charge on individual customers.

• Circular No. 34100034328 dated 25/11/1434H regarding the consultative document: Margin Requirements for Non-centrally Cleared Derivatives issued by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions.

• Circular No. 341000141835 dated 22/12/1434H concerning the issuance of Draft Rules on Loan Classification and Provisioning.

• Explanatory circular No. 341000141837 dated 22/12/1434H containing the requirements for appointments to senior positions in institutions supervised by SAMA and defining basic posts for which banks have to obtain SAMA’s non-objection before appointment therein.

• Circular No. 35100013413 dated 30/01/1435H regarding BCBS’s Consultative Document on Fundamental Review of Trading Book: Market Risk Framework.

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Ninth: Prominent Regulatory Developments in the Saudi Economy during the Fourth Quarter of 2013

• Issuance of the Council of Ministers' Resolution dated 23/12/1434H (28/10/2013) approving the Regulation for Government Assistance Disbursements to Citizens Affected by Rainfalls, fires etc.

• Issuance of the Council of Ministers' Resolution dated 23/12/1434H (28/10/2013) approving the Tourism Regulation (tourist accommodations, fees of tourism activities, professions and other services).

• Issuance of the Council of Ministers' Resolution dated 1/01/1435H (4/11/2013) approving the disbursement of a cash reward (5 percent of the value of confiscated funds under a court verdict) for those who report of money laundering or terrorism financing operations other than those who work with financial institutions, non-financial significant businesses and non-profit organizations if he/she provides evidence that can be relied on to begin an investigation.

• Issuance of the Council of Ministers' Resolution dated 1/01/1435H (4/11/2013) approving the Public Transport Project in Al-Madinah.

• Issuance of the Council of Ministers' Resolution dated 13/02/1435H (16/12/2013) approving the Law for Crimes of Terrorism and its Financing, stipulated in the Anti-Money Laundering Law.