Riyad Bank’s transformation into the region’s best bank for small and medium-sized enterprises coincides with Saudi Arabia’s Vision 2030 plans to diversify away from oil and towards tourism, manufacturing, clean energy and logistics. SMEs are one of the key planks not only of Riyad Bank chief executive Tareq Al Sadhan’s business strategy but also for Vision 2030. The kingdom has a longstanding aim of boosting the share of loans allocated to smaller firms to 20% by the end of the decade, against 2% in 2015.
Riyad Bank’s SME loan portfolio as a share of total lending stood at 13.4% at the end of 2020 versus 4.7% in 2015 (the national average is 8%). Covid forced the lender to think and act in new and innovative ways. On the orders of the central bank, it deferred payments for 21,000 smaller companies, collectively worth SR40 billion ($10.67 billion), and kept its 28 SME, corporate banking and trade finance centres open for business. Under the aegis of the Kafalah Programme, which offers credit guarantees to banks that extend loans to SMEs, the bank launched subsidized lending schemes at very low interest rates.
During the awards period it launched two financing schemes, one for payroll, the other for suppliers, which offer grace periods of up to 12 months to help clients weather the pandemic. It also waived all fees and charges associated with digital products to encourage clients to move online.
Covid accelerated its digital journey, which in turn helped its customers. The average turnaround time for new credit applications fell to 48 hours at the end of 2020 compared with 42 days in 2016. Riyad Bank’s investment in artificial intelligence (AI) and machine learning is helping firms to anticipate cash flow needs and the bank to predict future risks such as corporate defaults. During 2020 it allocated more staff to serving and supporting SMEs; the number at the end of the year was 185, against 163 a year earlier. It’s another sign of how seriously Riyad Bank takes SMEs against the backdrop of a resurgent and increasingly diversified economy.
