The Saudi Arabian Monetary Agency (SAMA) released monetary data for May 2016. Major points worth highlighting are:  I.   Deposits continue to decline, falling 0.5% M-o-M       II.   Loan growth momentum sustains; +0.8% M-o-M     III.   Sector LDR rises 120bps M-o-M to 89.9%;     IV.   Sector aggregate profits rise 6% M-o-M   Sector deposits declined 0.5% M-o-M; 1% YTD decline: Aggregate deposits of the sector declined 0.5% M-o-M, bringing the total decline to 1.0% YTD. Private sector deposits declined 1% M-o-M. Sector LDR rose 120bps to 89.9% as loan growth sustained despite decline in deposits. Money supply base continued to contract, declining by 0.4% M-o-M.   Loan growth momentum sustaining; but banks reaching capacity: Loan growth momentum was broadly steady at 9.5% Y-o-Y/0.8% M-o-M, driven mainly by short- and medium-terms loans. We believe corporate working capital requirements have risen due to slower payments from government; however, we believe lack of growth in the funding base is showing capacity constraints at banks. Sector LDR stood at 89.9% in May.   ATM & POS rebound: ATM withdrawals and POS transactions recovered sharply after a steady decline over the past few months; however, this could be due to seasonality. Trade data remained weak, falling 15% M-o-M.   We continue to favour Samba in this tight liquidity environment: Samba’s low LDR makes it stand out in the current environment. While other banks are likely to face capacity constraints soon, Samba can use its balance sheet liquidity to grow profitably. Samba’s LDR of 74.2% in Mar-16 was significantly lower compared to sector average of 87.5%. (SAMA, Murad Ansari)   Samba Financial Group: SAR19.44 as of 28 June 2016, Rating: Buy, FV: SAR25.00 per share, MCap: USD10,368 million, SAMBA AB / 1090.SE