Moody’s Investors Service upgraded ratings of 11 Saudi banks, reflecting the Kingdom’s robust and improving economic performance and stability. These upgrades include long-term deposit and senior unsecured rating improvements for Saudi National Bank, Al Rajhi Bank, and Riyad Bank. Saudi Awwal Bank, Banque Saudi Fransi, and Alinma Bank also benefited from Moody’s decision to upgrade their ratings this year. Additionally, Arab National Bank, Bank AlBilad, and Saudi Investment Bank witnessed similar positive rating changes during Moody’s recent review process. Bank AlJazira and Gulf International Bank also received upgraded ratings, highlighting the resilience of Saudi Arabia’s banking sector.
The move follows Moody’s earlier upgrade of Saudi Arabia’s sovereign credit rating to Aa3, citing enhanced government support capabilities.
Economic Diversification Drives Growth
The agency noted the expectations that Saudi Arabia’s non-oil private sector GDP will grow by 4-5% annually. This growth stems from the Kingdom’s ongoing efforts to diversify its economy under Vision 2030. Moody’s highlighted that this progress reduces dependency on oil and strengthens the financial system’s resilience to global energy market fluctuations.
Economic and Banking Resilience: A Pillar of Stability
Saudi banks have maintained high levels of efficiency and sound cost controls, despite a sharp increase in funding costs due to accelerated loan growth. The sector is expected to rely more on market funding as credit demand rises. Moody’s affirmed a stable outlook for most banks, except Al Rajhi Bank, which retains its previously stable status
Government Support Enhances Stability
Moody’s emphasized the Saudi government’s commitment to supporting financial institutions, underscored by its strong track record of timely interventions. This assurance has boosted confidence in the sector’s ability to navigate potential economic challenges.
With a positive outlook for the banking industry, the Kingdom is well-positioned to sustain its economic momentum and attract further investment.
