RIYADH: Moody’s Ratings said Saudi Arabia’s banking sector outlook remains steady, with higher non-oil economic growth and good capital buffers supporting lending and profitability, predicting continuing expansion despite liquidity limitations.
In its most recent analysis, credit rating firm Moody’s predicted that the Kingdom’s non-oil GDP will grow by 4.2 percent this year, up from 3.7 percent in 2025. In January, S&P Global had a similar perspective, stating that Saudi banks are likely to maintain strong lending growth in 2026, supported by funding demand for Vision 2030 projects.
Fitch Ratings also emphasised the strength of Saudi Arabia’s banking system last month, adding that credit growth and high net interest margins are boosting bank profitability in the Kingdom. Ashraf Madani, vice president and senior credit officer at Moody’s Ratings, commented on the latest report, saying: “We expect credit demand to remain robust, but tight liquidity conditions will continue to limit the sector’s lending capacity.
Madani also stated that operational conditions in Saudi Arabia will continue to support banks’ good asset quality and profitability. The operating environment for banks remains buoyant, underpinned by a forecast increase in non-oil GDP growth, robust solvency and continued progress toward the government’s economic diversification goals,” he added.
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