The annual growth in Saudi Arabia's M3 money supply fell for a third month in a row in July to 15.3 percent, as loans to the private sector posted their lowest annual expansion in at least three years.Bank claims on the private sector, a key indicator of lenders' confidence in the economy, stood at 728.84 billion riyals in July, inching up from 728.7 billion riyals in June, according to data published by the Saudi Arabian Monetary Agency (SAMA) on Tuesday.
In terms of annual growth, bank claims on the private sector slowed to 3.6 percent in July, down from 5.6 percent in June.
M3 stood at 1.01 trillion riyals ($269.7 billion) in July compared to 1 trillion riyals in June, when its annual growth reached 16.4 percent.
In July 2008, money supply stood at 877.1 billion riyals.
M3 is the broadest measure of money circulating in the economy.
The month of July coincided with the summer holiday which sees hundreds of thousands of Saudi holidaymakers withdraw substantial sums of money before travelling.
July also saw WTI oil prices drop to a monthly average of $63.8 per barrel, down from $69.6 in June, Riyad Capital said in a report issued on Saturday.
Banks have been more risk-averse since September as the global economic slowdown hit demand on private sector output, especially petrochemicals, and as problems encountered by two private conglomerates heightened lenders' perception of risk.
The fact that oil has been trading for much of the year above the Saudi budget's break-even price of $36-$40 per barrel suggests the Saudi banking system will not face any liquidity shortages.
In July, banks increased their deposits with the central bank to 128.6 billion riyals in July, up from 118.5 billion riyals in the previous month and 87.1 billion riyals in July, 2008.
Demand deposits, or total amount of deposits in current accounts, rose to 403.1 billion riyals in July, up from 390.6 billion riyals in June 2009 and 349.1 billion riyals in July 2008.
SAMA's net foreign assets stood at 1.43 trillion riyals in July, which is their lowest level since June 2008. They stood at 1.46 trillion riyals in June 2009 and 1.50 trillion riyals in July 2008.
The drop was mainly due to withdrawals by SAMA on its deposits with banks abroad, the second-largest component of its net foreign assets. The biggest component, investments in foreign securities, inched down 0.4 percent in July compared to the previous month.