Ihsan Buhulaiga, a Saudi economist, said traditionally risk-averse local banks should reconsider their approach.
“If economic growth continues north of 4 per cent, banks need to expand their capitalisation and revisit their risk matrix so it fits better with what’s going on in the economy, which is very serious,” he said. “You cannot just sit pretty and say ‘OK, we’ll continue as usual as we used to do in 2010.’ No, things are different now.”
Yet some rating agencies expect lending growth by banks to slow slightly. Ramsdale said Fitch was projecting loan expansion of about 13 per cent in 2025, 1 percentage point behind 2024, and a further dip to 10 per cent for 2026.
Banks are “slowing down slightly to compensate for that tighter liquidity and tighter capitalisation,” he said.
Madani said Moody’s also expected Saudi “credit growth to ease up” as financing costs for banks rise.
“If economic growth continues north of 4 per cent, banks need to expand their capitalisation and revisit their risk matrix so it fits better with what’s going on in the economy, which is very serious,” he said. “You cannot just sit pretty and say ‘OK, we’ll continue as usual as we used to do in 2010.’ No, things are different now.”
Yet some rating agencies expect lending growth by banks to slow slightly. Ramsdale said Fitch was projecting loan expansion of about 13 per cent in 2025, 1 percentage point behind 2024, and a further dip to 10 per cent for 2026.
Banks are “slowing down slightly to compensate for that tighter liquidity and tighter capitalisation,” he said.
Madani said Moody’s also expected Saudi “credit growth to ease up” as financing costs for banks rise.
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