Banks in Saudi Arabia are expected to continue tapping international capital markets to help fund growth related to Vision 2030, a global rating agency said.
Fiscal risks from rising debt issuances by the government and Public Investment Fund are being mitigated by the recalibration of some large infrastructure projects, S&P Global Ratings said.
The Saudi government is expected to maintain a net asset position above 40 per cent of GDP through 2027, Zeina Nasreddine, Associate Director – Dubai, S&P Global Ratings said.
Banks are poised for stable profitability in 2025 on stronger credit growth, Nasreddine said, expecting the cost of risk to normalise on a supportive economic environment and declining interest rates.
Saudi Arabia’s ‘Vision 2030’ initiatives are set to enhance non-oil growth in the medium term, driven by increased construction activities and a growing services sector fuelled by rising consumer demand and workforce expansion.
Nasreddine, however, said a higher private sector leverage may have adverse implications for asset quality over the longer term.
Corporate lending is set to drive credit growth, supported by a strong project pipeline, while lower rates could boost mortgage lending, she said.
Lending growth is likely to remain strong at around 10 per cent, driven primarily by corporate lending stemming from the implementation of Vision 2030 projects.
Non-performing loans (NPLs) are expected to be about 1.7 per cent of overall loans in 2025 from 1.3 per cent as of September 2024 as significant write-offs are not expected.
Credit losses will likely reach 50-60 basis points in the next 12-24 months enabled by banks’ comfortable provisioning cushions, Nasreddine said.
Follow us on
