Riyadh KPMG office managing partner Khalil Ibrahim Al Sedais said that the lending space in the Saudi banking sector has been rife with continued growth in mortgage financing throughout the COVID-19 environment.
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“It is an endorsement of the housing demand in the country and testament of government support measures,” he was quoted as saying in a press release.
The Vision is the country’s framework to develop several sectors.
The report records the sector is experiencing a range of regulatory changes, including the value-added tax (VAT) reforms and the institutionalization of the real estate transaction tax (RETT), with mortgage finance continuing to record significant growth for the first time.
The 5% RETT came into force in October. Around the same time, most real state deliveries were exempt from VAT. VAT was introduced in 2018 and increased from 5% to 15% earlier this year.
The KPMG report recorded these observations following the disclosure of third-quarter 2020 financials by listed banks. Al Sedais said that retail property buyers have welcomed the step-down of the tax rate from 15% – when they had to pay VAT – back to 5% – now with the RETT tax.
Saudi banks’ assets increased by 9.8% from December 2019 to September 2020, while the customer deposit base during the same period rose by 5.7%. Net profitability declined by 6%.
The KPMG head of financial services in Saudi Arabia, Ovais Shahab, was quoted as saying that he observed multiple efforts towards customers’ endurance at the back of the strong capital base and funding structure of the industry
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