Fitch Ratings said in a new report that Saudi banks’ credit conditions remain strong and financial indicators indicate they are less sensitive to economic downturns than most GCC peers.
Saudi Arabia’s business environment is favorable, as reflected in its ‘bbb+’ score, which is the highest in the GCC (along with the UAE).
This is supported by still high government spending, continued economic diversification and non-oil growth under Vision 2030, and progress on giga projects.
Saudi banks have grown at about twice the GCC average since the pandemic, but growth started to slow in the second half of last year.
“We estimate that full-year growth in 2025 will remain strong at around 13%, but we expect growth to slow to 10% to 11% in 2026. This moderate growth is a natural result of credit saturation after several years of rapid expansion. “The sector’s average cost of funds rose 30 basis points in Q3 2025 compared to 2024, despite lower interest rates and stricter capital controls, reflecting increased funding competition,” Fitch said in the report. review.
“Despite the liquidity squeeze, we continue to believe that funding and liquidity are strengths of Saudi banks’ ratings, and we expect this to continue in 2026. Banks have maintained meaningful liquidity buffers and strong access to diverse funding sources, which underpins their resilience amid slower growth and an increasingly competitive deposit environment,” it added.
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