Saudi banks to see stronger performance in Q1 2025: Fitch

Saudi Arabian banknotes

Saudi banks are set for a stronger start to 2025, with their asset-quality metrics expected to “remain strong” throughout the year, Fitch Ratings said in its latest report.

The agency noted that lower interest rates helped boost Saudi bank’s net interest margins (NIMs) in Q4 2024, supported by strong lending growth.

Fitch further stated, “We expect [Saudi banks’ lending growth] to continue outpacing Gulf peers' in 2025.”

In Q4 2024, Saudi banks’ combined net income rose to SAR 21.5 billion, from SAR 20 billion in the previous quarter. This was driven by the rapid lending growth and lower cost of risk, “both underpinned by the healthy operating environment,” the agency added.

Saudi banks’ total lending, according to Fitch, is estimated to grow by 12% in 2025. “Further interest rate cuts and stronger liquidity conditions should underpin banks’ growth appetite,” it wrote.

Fitch also expects Saudi banks to gradually increase their reliance on external funding, particularly as corporate borrowers seek more foreign currency loans. However, it noted that net foreign assets are seen to remain below 2% in 2025.