Saudi Arabia’s banking sector is more resilient to economic shocks thanks to strong capital buffers, the Saudi Arabian Monetary Authority (SAMA) said in a recent report.

 

Stress tests showed that capital adequacy ratio in the banking system remained much higher than the 8 percent level required by Basel III and also than the minimum 12 percent level set by the Kingdom’s central bank.

 

The stress testing was based on a base case scenario, macroeconomic shocks amid higher interest rates, and macroeconomic shocks amid lower interest rates.

 

SAMA added that the testing aimed to evaluate the banking sector’s ability to absorb macroeconomic shocks and define weaknesses in the whole sector and on a case-by-case basis. 

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