Saudi bank loans to grow 10% in 2025: S&P Global

Bank loans in Saudi Arabia are estimated to grow by 10% during the current year, primarily driven by corporate lending from the implementation of Vision 2030 projects, S&P Global said in its Saudi Arabia banking sector outlook 2025.

Mortgages will likely receive a boost due to lower interest rates and demographic expansions, backed by demand for residential real estate, the rating agency added.

Saudi banks are poised for stable profitability in 2025, where loan volume will offset lower margins, S&P noted. The banks maintain strong capitalization, which is expected to continue supporting their solvency.

Saudi banks’ dependence on external funding sources will likely continue given the investment needs of Vision 2030. Additionally, mortgage-backed securities initiatives could help facilitate financing, it noted.

S&P Global also pointed out that the growth in non-performing loans (NPLs) is projected to slow down due to subdued interest rates. Meanwhile, NPLs are seen to rise to approximately 1.7% of total sector loans by year-end, compared to 1.3% in September 2024. No significant write-offs are expected.

The agency further noted that mergers in the Saudi banking sector have led to the emergence of large dominant banks. While this has resulted in market concentration and more fierce competitive pressures on smaller institutions, the overall financial stability of the sector remains solid.