Business Portfolio Review

SME Business

Continuing with its tradition of developing innovative financial solutions tailor-made for customers, the Bank sought to support the SME segment during the year under review.

The Bank has long acknowledged the importance of the SME sector. Smaller businesses are well recognised world over for the significant role they play in global economic growth. The vibrant SME sector of the Kingdom is no different, playing a pivotal role in generating employment, driving economic growth, increasing cross border trade, and fostering the spirit of entrepreneurship. In 2020, the total SME business portfolio amounted to SAR 6.5 Bn. compared to SAR 4.4 Bn. in 2019, recording a growth of 49% YoY.

Operating context

Acknowledging the SME sector’s strategic importance to the health of the Kingdom’s economy, the Government has launched multiple programmes to support this important sector and make the most of its potential for growth. For example, the recently established SME General Authority (Monsha’at) aims to enhance the role of SMEs along with many other institutions which provide different levels of support for the development of this sector. The Saudi Industrial Development Fund (SIDF) supports industrial sector SMEs and has developed a business resource centre, modernisation centre and financing facilities for SMEs, while the Ministry of Finance has launched “Kafala”, the SME loan guarantee programme which facilitates bank lending to SMEs.

With a majority of customers in this segment representing industries such as hospitality, entertainment, and travel, however, the Bank’s SME customer base, which represents a small number of its total customer base, was severely impacted by the global pandemic.

Providing support

In compliance with SAMA’s mandate, the Bank waived all processing, early settlement and brokerage fees for all customers including SMEs from April to October 2020.

Underlining the importance of the SME segment and with a view to enhance the competitiveness of SMEs in the globalised scenario, the Bank improved its ability to work across business lines, restructuring internal teams to meet the financial requirements of small businesses operating in various sectors of the economy.

During the year under review, a team of professional relationship managers remained present at key locations across the Kingdom to understand the core financial issues of SMEs and provide solutions.

A novel mobile application was also introduced for the benefit of Corporate SME customers. Its features include end-to-end digital account opening for sole proprietors. The dedicated web portal for this customer segment was also upgraded to offer a range of services such as digital bulk payments.

Future outlook

With the effects of the pandemic set to impact the SME sector over the near to medium term, the Bank will focus its energies on supporting this customer group by reaching out and co-creating products and services that will best support them on getting back in business.

In particular, the Bank will seek to adopt a customised and differentiated approach towards SME lending, identifying high growth SME industry segments and striving to attain market leadership in such areas.

As part of its BOTF Strategy (refer page 41), the Bank will focus on deepening its presence in the SME segment and take advantage of the growth in this sector.