Saudi Finance Companies’ Credit Surges to $26.5bn as Role in SME, Consumer Lending Expands

Saudi Arabia’s finance companies reported outstanding credit of SR99.37 billion ($26.5 billion) at the end of the second quarter of 2025, reflecting a 10.2 percent rise compared with the same period last year, according to the Saudi Central Bank (SAMA).

While the figure represents only 3.12 percent of total financing extended by the Kingdom’s commercial banks, the steady growth underscores the expanding footprint of non-bank lenders in the financial system.

The bulk of the lending remains consumer-focused. Personal finance accounted for the largest share at SR28.7 billion, or 29 percent of total credit. Auto loans followed at SR25.93 billion, while residential real estate lending comprised about SR23 billion, or 23 percent of the portfolio.

Smaller segments also posted robust growth. Credit card financing surged 31.5 percent year on year to SR2.12 billion, making it one of the fastest-growing categories. Commercial real estate loans jumped 22.8 percent to SR5.66 billion, while other credit lines climbed 14 percent to SR14.04 billion.

SAMA’s data showed the retail sector remained dominant, accounting for 77 percent of finance company lending. Though this concentration poses risk, about half of retail loans are directed toward public sector employees with stable incomes, which helps mitigate defaults.

Micro, small, and medium-sized enterprises (MSMEs) accounted for nearly 19 percent of total lending, a much higher share than seen in bank portfolios. This highlights the role of finance firms in closing the SME financing gap and supporting the Vision 2030 target of raising SME access to credit to 20 percent by the end of the decade. Large corporates, by contrast, made up just 4.4 percent of the loan book, as they continue to rely mainly on banks and capital markets.

Finance companies, which are non-deposit-taking institutions, have become vital in offering credit to underserved borrowers — from individuals seeking personal or installment loans to entrepreneurs with limited collateral. Their business models include leasing, microfinance, and buy now, pay later services, providing competition and alternatives to traditional banks.

SAMA has been driving growth in the sector as part of the Financial Sector Development Program. Reforms since 2022 have allowed companies to operate across multiple lending activities, while a halving of minimum capital requirements to SR50 million for SME-focused lenders has encouraged new entrants. The regulator has also licensed crowdfunding platforms and fintech-driven models.

As of September 2025, the number of licensed finance companies had reached 68, up from 62 at the end of 2024. This includes firms spanning consumer finance, mortgages, leasing, and fintech lending.

Analysts say the combination of regulatory backing, fintech innovation, and targeted SME and consumer lending positions the sector for continued expansion. Although finance companies currently account for only a small slice of Saudi Arabia’s credit market, their role in financial inclusion is growing, making them an increasingly important complement to the Kingdom’s banking sector.