According to a report published on HIBNA, the official news outlet of the state-run lender, 62% of all the deposits made with the bank by the end of the fourth month of the current fiscal year on July 22 were short-term deposits with maturity periods of less than one year.
Naturally, short-term deposits legally yield lower interests than their long-term counterparts that need to be entrusted with the bank for a year.
“The high share of short-term deposits leads to a decrease in expenses when it comes to offering deposit interest rates,” Financial Tribune cited the report as saying.
Long-term deposits, now legally prohibited from exceeding maturity periods of one year as per an agreement between banks four years ago and approved by the central bank, grabbed an 18.7% share of the bank’s total deposits.
At present, banks cannot sign contracts exceeding one year maturity, although the central bank previously signaled that it may allow longer-term contracts in the future.
According to Bank Maskan, one-year deposit contracts constitute more than 90% of its current long-term deposits portfolio.
HSA Deposits
Deposits entrusted to the Housing Savings Account and other home savings initiatives run by the bank had a 13.4% share of its total deposit resources.
HSA, which requires first-time homebuyers to make a down payment and wait for a year to become eligible for cheap loans, had the highest share of the aforesaid amount, but the bank did not disclose figures.
Lastly, about 2.4% and 3.6% of Bank Maskan’s deposits and savings were Qarzol-Hassanah (interest-free) in the first four months of the current year.
In terms of expenses, the bank reported that loans and facilities allocated in the housing and construction sectors have accounted for the highest share at 61% in the aforementioned period.
Partnership contracts, supported by the central bank, came second with a 14.7% share. These types of loans are allocated to applicants with the specific aim of building one or several residential units.
Applicants must first use another Bank Maskan facility, such as its housing savings accounts or housing bonds.
Jo’alah facilities handed out for home renovation grabbed a 12.2% share of Bank Maskan expenses in the aforesaid period. They were followed by Murabaha loans with a 5.8% share and interest-free loans with a 5.1% share.