The loan book increased by 4.0% MoM (up 10.1% YTD) while deposits increased by 1.9% MoM (+8.4% YTD) in the month of September 2014. Public sector drove the strong growth in the overall loan book.
Moreover, deposits also increased by 1.9% MoM (deposits increased by 1.3% MoM in August). Thus, the LDR increased to 107% vs. 105% in August. Going forward, we expect increased activity in the sector. We continue to expect improvement in the public sector, in addition to large corporate loan growth to be the primary drivers of the overall loan book in 2014 followed by the SMEs and consumer lending. Our view is based on the expected uptick in project mobilizations in the coming months.
Public sector posted a strong performance in the month of September 2014. The public sector deposits increased by 7.8% MoM (+9.9 YTD 2014) for the month of September 2014. Delving into segment details, the government institutions’ segment (represents ~55% of public sector deposits) improved by 2.1% MoM (+10.8% YTD 2014). Moreover, the semi-government institutions’ segment posted a growth of 12.8% MoM (down 9.1% YTD 2014). In addition, the government segment increased by 16.5% MoM (+18.6% YTD). On the other hand, private sector deposits declined by 2.3% MoM (+8.0% YTD 2014). On the private sector front, the companies & institutions’ segment decreased by 5.0% MoM (+7.0% YTD 2014) while the consumer segment posted flat performance, up 0.4% MoM and 8.9% YTD 2014.
The overall loan book increased by 4.0% MoM vs. a 0.8% growth MoM in August 2014. Total domestic public sector loans grew by 3.9% MoM to recover lost ground (flat YTD). The government segment’s loan book grew by 23.0% MoM (up 22.1% YTD 2014). However, the government institutions’ segment (represents ~57% of public sector loans) declined by 2.3% MoM and is down 10.5% YTD. Furthermore, the semi-government institutions’ segment declined by 1.6% MoM (+12.0% YTD). Hence, the government institutions and semi-government segment pulled the overall growth down for the month of September 2014. Private sector loans gained by 2.4% MoM and are up 13.5% YTD. Consumption & Others (contributes ~30% to private sector loans) increased by 1.7% MoM (+15.8% YTD). Furthermore, the Real Estate segment (contributes ~26% to private sector loans) grew by 2.1% MoM (+3.5% YTD). However, Services segment posted a decline of 1.8% MoM but is still up 20.5% in the first nine months of 2014. Overall, Contractors (+22.2% YTD) and Services (+20.5% YTD) segments are the best performing segments in the private sector YTD. On the other hand, the Industry segment is down 1.3% YTD.