Saudi Arabia: Best Bank for SMEs 2020
The best way to understand the evolution of the likes of Riyad Bank in recent years is to flick through the pages of Saudi Arabia’s Vision 2030, a vast diversification project by the region’s most important economy.
One of the overarching plans of Vision 2030 is to devote more resources to small and medium-sized enterprises, a financial demographic that was overlooked by the country’s lenders for way too long. At the heart of it is a government-led strategy called the Kafalah Programme, which is backed by the Saudi Industrial Development Fund and channels lending to smaller enterprises.
The programme is being augmented by a government initiative, introduced in March 2020 in response to the pandemic, to channel another SR50 billion ($13.33 billion) in financial aid to smaller firms struggling because of a sluggish economy.
All banks take Kafalah seriously but none more so than Riyad Bank, led by CEO Tariq Al-Sadhan.
Working in harmony with the programme, it increased its total financing of SMEs in 2019 by 45% year on year.
Of all the lending channelled to smaller firms under the aegis of Kafalah, more than a quarter has been the preserve of Riyad Bank.
The country’s third-largest lender by assets, it has 21 centres and offices dotted around the Kingdom, dedicated to serving small and medium-sized firms, many of which are located in remote areas. Three of those opened for business in 2019.
Riyad Bank has also streamlined its SME underwriting process to ensure that smaller businesses don’t have to wait too long to secure credit or to apply for a new service or account. During the awards period, it launched point-of-sale financing and debit cards for micro-sized enterprises.
Its investment in the segment continues to pay off. Total income generated from SMEs rose 42% year on year in 2019; the number of domestic small businesses with a borrowing relationship with Riyad Bank rose 20.4% over the same period.