Saudi Finance Companies See Strong Growth in 2024 as Lending Surges to SR96 Billion

Finance companies in Saudi Arabia saw a significant uptick in activity during 2024, with total credit rising to SR96.26 billion ($25.67 billion), reflecting a 13.6 percent increase from the previous year, according to new data released by the Saudi Central Bank (SAMA).

The retail sector continued to dominate the lending landscape, with personal finance leading at SR27.6 billion — accounting for 29 percent of total credit issued. Auto loans followed at SR25.16 billion (26 percent), while residential real estate financing made up SR23.36 billion (24.27 percent). Credit card financing, though representing a smaller slice of the pie, posted the fastest growth at 52.4 percent year-on-year, reaching SR1.92 billion.

Commercial real estate loans also climbed by 20 percent to SR4.92 billion, while auto and personal loans grew at healthy rates of 18.8 percent and 18.6 percent, respectively.

The rise in lending was not limited to retail. Finance to micro, small, and medium-sized enterprises (MSMEs) accounted for around 19 percent of total loans — nearly double the share MSMEs receive from traditional banks. In contrast, large corporate financing remained limited, with big firms continuing to favor bank loans and capital markets for their funding needs.

Profitability also saw a sharp improvement. Net income in the sector rose by over 72 percent to SR2.86 billion, while return on assets increased from 2.59 percent to 4.13 percent. Return on equity rose to 9.58 percent, up from 6.97 percent in 2023, indicating improved cost efficiency, higher demand, and growing investor confidence.

The sector’s growth has been supported by key regulatory changes. In 2023, SAMA lowered capital requirements for SME-focused finance firms from SR100 million to SR50 million, while Buy-Now-Pay-Later (BNPL) providers were allowed to enter the market with just SR5 million in capital. These reforms have attracted new players and fostered innovation, particularly in fintech.

By the end of 2024, SAMA had licensed 62 finance companies across segments such as consumer finance, mortgages, leasing, and digital lending. Tamara Finance Co., a leading BNPL provider and Saudi Arabia’s first fintech unicorn, received its consumer finance license in March, bringing the total to 65 licensed firms.

Although finance companies account for just 3.26 percent of total credit in the Kingdom — compared to SR2.96 trillion in bank lending — they play a critical role in serving underserved populations and offering alternative financing options, especially for individuals and SMEs excluded from the traditional banking sector.

Fintech-driven platforms, including debt-based crowdfunding intermediaries, are helping to bridge funding gaps, advancing the goals of Saudi Arabia’s Vision 2030 to expand financial inclusion and build a cashless, digital economy.