Saudi Arabia personal loan Market Expected to Reach $670.58 Billion by 2031

According to a recent report published by Allied Market Research, titled, “Saudi Arabia Personal Loan Market by Type, Martial Status, Consumer Age, and End User: Global Opportunity Analysis and Industry Forecast, 2022–2031,”

The Saudi Arabia Personal Loan market was valued at $146.54 billion in 2021 and is projected to reach $670.58 billion by 2031, registering a CAGR of 16.3% from 2022 to 2031.

Rapid increase in need for personal loans to consolidate debt, emergence of FinTechs (financial technology), and growth in demand for personal loans with lower interest rates drive growth of the Saudi Arabia personal loans market. Demand for personal loans is growing exponentially due to several benefits such as helping in eliminating financial stress & borrowers that qualify for a personal loan with a lower interest rate can streamline their monthly payments & save money for future financial consequences.

Moreover, the Saudi Arabia personal loans market is in its nascent phase, and exhibits high growth potential, owing to better credit history record among consumers, adoption of advance technologies such as artificial intelligence, block chain, & machine learning among personal loans firms, and rise in need for operational efficiency & transparency in providing personal loans product lines.

Furthermore, high demand for residential houses from expatriates entering the country and increasing number of initiatives by government to strengthen the financial system is boosting the growth of the global Saudi Arabia Personal Loan market. In addition, development of digitization and the instantaneous loan and approval procedure is positively impacting the growth of the Saudi Arabia Personal Loan market. However, emerging non-banking finance companies and FinTech companies and Increasing security concerns is hampering the Saudi Arabia Personal Loan market growth. On the contrary, increase in entrance of new players in KSA personal finance is expected to offer remunerative opportunities for expansion of the Saudi Arabia Personal Loan market during the forecast period

Depending on type, the P2P segment holds the largest Saudi Arabia personal loan market share as it allows individuals to give loans to other individuals or participate in several other pools of loans. However, the balance sheet segment is expected to grow at the highest rate during the forecast period, as it allows directly to deal with the original lender in the event of a problem during the course of loan tenure

The Saudi Arabia personal loans market has been severely affected by the COVID-19 pandemic but as the economy is slowly getting back on the track, travel ban restrictions have been uplifted which implies that consumers will take personal loans to fulfill their travel needs. In addition, the constant need for improving standard of living, consumers take personal loans to purchase new equipment’s such as home decor, home renovation, and others. 

In addition, many retail sellers are offering no cost equated monthly installments (EMIs) to their customers taking personal loans and making big ticket purchases. For instance, in April 2020 according to Saudi Arabian Monetary Authority (SAMA) has implemented a postponement of payments program worth SAR 30 billion to help funding authorities providing capital to Micro, Small and Medium Enterprises (MSMEs) and other institutions and companies, which allows for the delay of repayments of loans and other financial obligations to the relevant funding authorities for a period of 6 months. These are some of the innovative steps towards increasing the demand for personal loans and reducing the negative impact caused by the pandemic.

Furthermore, interest rates on personal loan, as compared to repayment of credit card loan is significantly lower for which the consumers are increasingly preferring personal loans. For instance, in June 2022, according to Arab news More Saudis took out personal finance loans in the first three months of 2022, which is likely to have increased retail spending as the Kingdom continues to recover from the pandemic's effects. According to the latest figures from the Saudi Central Bank, total loans provided by Saudi Arabia's finance companies grew 4.4 percent to SR71.1 billion ($18.96 billion) at the end of the first quarter of 2022, from SR68.2 billion in the previous quarter. 

The growth came mainly from personal finance loans, which increased SR1.8 billion to hit SR16.3 billion at the end of the first quarter. Moreover, with the technological advancement in the field of lending and financing, block chain, artificial intelligence, machine learning is helping to improve the lending process and making it faster and more user friendly. Therefore, these factors will provide lucrative opportunities for the growth of personal loans market in the upcoming years.

Key Findings of The Study

• By service type, the employer supplied Saudi Arabia personal loan segment accounted for the largest Saudi Arabia personal loan market share in 2021.
• Region wise, North America generated highest revenue in 2021.
• Depending on end user, the salaried segment generated the highest revenue in 2021.

The key players profiled in the Saudi Arabia personal loan market analysis are Abdul Latif Jameel United Finance Company, Al Rajhi Bank, Alinma Bank, Arab National Bank, Bank Albilad, Banque Saudi Fransi, Emirates NBD Bank, Emirates NBD Bank, Emkan Finance Company, Nayifat, Quara Holding, Riyad Bank, SAAB, Tamam Finance, SNB. These players have adopted various strategies to increase their market penetration and strengthen their position in the Saudi Arabia personal loan industry.