Introduction
In an epoch-defining event, the Union of Arab Banks (UAB) proudly unveiled the “Arab Banking Conference 2023: Arab Economic Outlook in Light of International Changes” under the esteemed patronage and presence of the Governor of the Central Bank of the Kingdom of Saudi Arabia on the 4th and 5th of September 2023 in Riyadh. This landmark event marks not only the inaugural conference organized by the UAB in the Kingdom of Saudi Arabia but also stands testament to the fiftieth anniversary of the Union of Arab Banks.
Distinguished by unwavering support and enthusiastic participation from the Saudi banking sector, the conference is a pivotal Arab-international platform. A congregation of economic and financial decision-makers from across the Arab world, this conference illuminated the transformational paths and various economic reform measures adopted by Arab nations.
The comprehensive agenda of the conference encompassed a spectrum of critical themes, reflecting the diverse challenges and opportunities inherent in the evolving economic landscape:
- Arab Transformation & Economic Diversification: Navigating the pathways toward economic resilience and diversification.
- Arab Reform & Transition to Economic Resilience: Unraveling the fabric of economic reform strategies amid dynamic international changes.
- “2030 Vision” and the Kingdom of Saudi Arabia’s experience: An in-depth exploration of the Saudi journey towards economic transformation.
- Climate Change and its Effect on Arab Economies: Assessing the impact of climate change and formulating strategies for sustainable economic practices.
- Digital Transformation in Financial Sector: An exploration of the profound implications and opportunities brought forth by digitalization in finance.
- Sustainable Finance: Paving the way for financial practices that align with long-term environmental and social sustainability.
The conference’s overarching objectives are far-reaching, aiming to shed light on the challenges facing Arab economic recovery and advancement, identify emerging economic and social opportunities in the context of climate change, set priorities for economic diversification, fortify the Arab banking and financial sector’s role in supporting national economies, leverage insights from the “2030 Vision” and Saudi experience in economic transformation, discuss the pivotal role of financial technology in the transition to a digital economy, and underscore the imperatives of transitioning to a green Arab economy.
Keynote Speeches
H.E. Mr. Ayman bin Mohammed Al-Sayari, Governor, Central Bank of KSA
H.E. Mr. Ayman bin Mohammed Al-Sayari emphasized that the FinTech strategy aims to achieve the desired economic impact, as it targets increasing FinTech companies to 525. “The FinTech strategy will contribute to creating 18,000 specialized jobs, as well as contributing to the gross domestic product (GDP) by an amount exceeding SR13 billion by 2030. The Saudi financial sector has been supportive of economic growth in Saudi Arabia, as financial institutions have worked to expand the scope of their services to include all private and individual borrowers from the sector.”
He indicated that the number of FinTech companies exceeded 200 companies by the end of last month. He pointed out that the Saudi economy recorded a growth of 8.7 percent in 2022, exceeding the global average of 3.5 percent.
H.E. Mr. Ayman bin Mohammed Al-Sayari said that the capital adequacy ratio (CAR) in the Saudi financial sector reached 20.1 percent by the end of the second quarter of 2023. He noted that the Saudi Arabian banking system enjoys solid performance indicators, as the liquidity coverage ratio (LCR) reached 188.3 percent by the end of the second quarter while the net stable funding ratio (NSFR) stood at 115 percent.
He pointed out that the private sector continues to support the Kingdom’s economic growth, noting that non-oil activities grew by 5.4 and 5.5 percent in the first and second quarters of this year respectively.
H.E. Mr. Ayman bin Mohammed Al-Sayari stated that Saudi banks expanded their lending activity to meet the continuing demand for bank credit while risk results remained moderate. This reflects the strength of the local economy, and in this context, credit increased 10.2 percent in the second quarter on an annual basis. He pointed out that as global challenges continue, SAMA continues to monitor local and global developments to maintain the stability and strength of the financial system.
He said that SAMA paid great attention to the banking system due to its central role in the economy, as all precautionary ratios for the banking system exceeded the ratios specified in Basel requirements. “This reflects a banking system with strong performance indicators,” he added.
Mr. Mohamed El Etreby, Chairman, Union of Arab Banks
Mr. Mohamed Al-Atrabi, underscored the UAB’s strategic objective to become a substantive pillar supporting the banking sector across diverse Arab nations. Positioning itself as a fundamental cornerstone for economic development throughout the Arab world, the Arab Banks Union has now evolved into a pivotal partner with the United Nations in the pursuit of sustainable development goals.
Addressing the Arab Banking Conference, he articulated that this conference signifies the initial manifestation of the Arab Banks Union’s intent to launch operations in Saudi Arabia. The primary aim is to fortify and advance collaborative endeavors in Arab banking, particularly by fostering robust relations between UAB and the Saudi banking sector. Mr. El Etrabi emphasized the substantial efforts invested by the UAB to ensure the conference’s success, leveraging all available resources to orchestrate an event commensurate with the esteemed standing of the Kingdom of Saudi Arabia.
He elucidates that the Arab Banks Union is steadfast in its commitment to making this conference a conduit for communication between the UAB, comprising 360 Arab banks, and the economic, financial, and monetary authorities in the Kingdom. This strategic alignment seeks to contribute significantly to the realization of Saudi Arabia’s Sustainable Development Vision 2030.
Mr. El Etrabi asserted that through its headquarters, UAB eagerly anticipates enhancing ties with the Kingdom of Saudi Arabia and its pivotal and advanced banking sector. With assets surpassing 3.6 trillion Saudi Riyals by the conclusion of the fiscal year 2022, this sector adheres to international banking standards, harmonizing with the Kingdom’s robust economic expansion and heightened credit demand from both the public and private sectors. This concerted effort has culminated in a notable 28% surge in net profits by the close of 2022, amounting to 63 billion Riyals for banks listed on the stock exchange. Noteworthy is their commendable placement among the top 25 banks in the Middle East, as per the 2021 ranking of the world’s best 1000 banks by “The Banker” magazine.
He underscored that the allure of the Saudi banking market has prompted several member countries within the union to proactively establish banking units in the Saudi banking landscape. Most notably, the Arab Republic of Egypt, distinguished by its financial robustness, solid institutional foundations, and extensive banking expertise, has witnessed prominent banks such as Banque Misr and the National Bank of Egypt—Egypt’s two largest government-owned banks—inaugurate branches within the Kingdom.
H.E. Dr. Abdulrahman Bin Abdullah Al Hamidy, Director General / Chairman of the Board, Arab Monetary Fund, UAE
H.E. Dr. Abdulrahman Bin Abdullah Al Hamidy announced that the AMF’s projections indicate a forecasted growth rate of approximately 3.4 percent for Arab economies in 2023, with expectations of this figure increasing to 4 percent in 2024.
He highlighted the need for Arab governments to accelerate their efforts to achieve digital transformation and shift towards a knowledge-based economy, noting that Arab countries that quickly recovered from the COVID-19 fallout were those with higher levels of digital readiness.
He also underscored the importance of intensifying efforts to develop the financial and banking sector in Arab countries, increase access to financing and financial services, enhance domestic capital markets, and promote regional financial integration.
The Arab banking system has become more prepared to absorb and withstand financial and economic shocks and risks due to its improved liquidity and solvency levels, compliance with Basel III capital and liquidity requirements, and adherence to International Financial Reporting Standard (IFRS) 9, while effective banking supervision capacities have been improved to be in line with the best international standards and practices, he explained.
H.E. Dr. Abdulrahman Bin Abdullah Al Hamidy affirmed that the banking sector in Arab countries is their primary source of economic liquidity, with assets totalling some US$4.1 trillion, equivalent to 124 percent of the combined Gross Domestic Product (GDP) of Arab nations.
The sector has generally remained stable and capable of withstanding shocks due to its good levels of capital, asset quality, and profitability, reflecting the role of Arab central banks in maintaining financial stability, he added, noting that the Arab banking sector is distinguished by its high solvency, with the average capital adequacy ratio reaching 17.4 percent at the end of 2022.
Dr. Wissam Fattouh, Secretary General – Union of Arab Banks – Honoring the Governor of Saudi Central Bank (SAMA)
At the culmination of the inaugural ceremony, Dr. Wissam Fattouh formally announced the distinguished recognition of H.E. Mr. Ayman bin Mohammed Al-Sayari, the Governor of the Saudi Central Bank. He was bestowed with the UAB’s prestigious accolade, a symbol of utmost appreciation and honor. This significant announcement transpired in the presence of Mr. Mohammed Al-Itarbi, H.E. Dr. Abdul Rahman bin Abdullah Al-Humaidi. The event also drew the attendance of prominent dignitaries hailing from official, economic, financial, and banking spheres, both within the Kingdom and beyond, encompassing the Arab and foreign domains.
In his Speech, Dr. Fattouh extended a warm welcome to the distinguished audience at the 2023 Arab Banking Conference, which has brought together an elite assembly of decision-makers, industry experts, leaders, and diplomats. He conveyed his gratitude and profound appreciation to the esteemed guests for gracing the event with their presence and active participation, conceived by the Union of Arab Banks as a prominent tribute to a distinguished luminary in the Arab banking landscape. This luminary is none other than His Excellency, H.E. Mr. Ayman bin Mohammed Al-Sayari, the distinguished Governor of the Saudi Arabian Monetary Authority (SAMA).
UAB Regional Office in KSA
H.E. Mr. Ayman bin Mohammed Al-Sayari, Governor, Central Bank of KSA confirmed the establishment of the UAB regional office in Saudi Arabia, saying that this strategic initiative was poised to fortify the Union’s operations and deliver essential services, particularly in the backdrop of recent economic shifts, global geopolitical transformations, and heightened global uncertainties affecting the trajectory of monetary policy.
The prevailing circumstances had compelled numerous central banks to implement stringent monetary measures to mitigate escalating inflationary trends. Governor Sayari elucidated that these measures, in turn, prompted the International Monetary Fund (IMF) to revise its global economic growth projections downward to three percent for the year 2023. This adjustment coincided with notable fluctuations in international markets and the mounting challenges confronting emerging economies.
H.E. Mr. Ayman bin Mohammed Al-Sayari underscored the imperative for meticulous monitoring and analysis of global economic challenges. This approach was essential to effectively address their repercussions and foster the evolution of financial and banking systems, incorporating advancements in financial technologies. It was against this dynamic backdrop that the UAB regional office in Saudi Arabia assumed a pivotal role in contributing to the resilience and adaptability of financial mechanisms within the region.
