Moody's upgrades credit ratings for 11 Saudi banks

Moody's Investors Service upgraded the long-term deposit ratings and standalone baseline credit assessments (BCA) for 11 Saudi banks it monitors in the Kingdom.

In its report, the rating agency said the upgraded banks are Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSF), Alinma Bank, Arab National Bank (ANB), Bank Albilad, Saudi Investment Bank (SAIB), Bank AlJazira, and Gulf International Bank (GIB) - Saudi Arabia.

The Saudi banks were upgraded on an improving operating environment in Saudi Arabia, and the government’s enhanced capacity to support banks when needed.

The agency revised its outlook for long-term deposit ratings from Positive to Stable for all banks except for Al Rajhi Bank, which retained its Stable outlook.

Moody's highlighted improving credit conditions for Saudi banks, driven by sustained momentum in economic diversification. It anticipates strong credit growth in the banking system, particularly for high-quality borrowers tied to mega-project implementations. This growth is expected to support asset quality and profitability across the banking sector, albeit to varying degrees.

It noted that its recent upgrade of Saudi Arabia’s sovereign credit rating to Aa3 from A1 reflects the government’s increased ability to support banks. All rated banks benefit from a very high level of government support, especially after Moody's reassessed the likelihood of government assistance for Alinma Bank, Bank Albilad, Saudi Investment Bank, and Bank AlJazira, upgrading their support probability from high to very high.

This reassessment underscores the critical role of the banking system in supporting Saudi Arabia's economic diversification agenda, which over time will reduce the Kingdom’s reliance on oil market developments.

Moody's emphasized that the stability and resilience of Saudi Arabia’s banking system bolster investor confidence. This, in turn, supports both local and foreign private investment, which is vital to the government’s diversification strategy, increasing the likelihood of government support when necessary.

According to available data, Moody's recently upgraded Saudi Arabia’s local and foreign currency credit ratings to Aa3 with Stable outlook.

It also raised the ratings of the Public Investment Fund (PIF), Saudi Aramco, giant petrochemical producer SABIC, Saudi Electricity Co. (SEC), stc, and Saudi Power Procurement Co. (SPPC). All were upgraded from A1 to Aa3, with their outlook revised from positive to stable.