RIYADH: Banks running in Saudi Arabia and the UAE are expected to post considerable credit score progress in 2025, pushed by high wrong costs and the expansion of the non-oil economy, based mostly completely on an diagnosis.
In its most up-to-date dispute, Fitch Rankings projected that banks in the Kingdom will stamp a financing progress of around 12 p.c in 2025, about twice the frequent of the Gulf Cooperation Council situation.
The US-based mostly completely agency added that corporates will memoir for nearly 65 p.c to 70 p.c of new financing among Saudi banks in 2025.
The diagnosis echoes same views to those attach forward by Moody’s in November, which predicted that Saudi Arabia’s Imaginative and prescient 2030 initiative, geared toward diversifying the Kingdom’s economy, may maybe well well drag up the progress of the banking sector in the country.
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In its dispute, Fitch Rankings talked about: “The running atmosphere for banks in the Kingdom is underpinned by high oil costs and executive spending, which red meat up the country’s giga-projects and the Imaginative and prescient 2030 approach, ensuing in actual non-oil unpleasant home product progress.”
It added: “Fitch Rankings forecasts right non-oil GDP progress to moderate a serene considerable 4.5 p.c over 2024–2025, when when put next with 5 p.c over 2022–2023. We attach a query to the sector’s monetary metrics to remain considerable in 2025.”
The dispute talked about that the late execution of giga-projects may maybe well well serene proceed to underpin banks’ pastime on this segment, although the recent a part of giga-mission-linked financing is minor for most rated banks.
On the replacement hand, the credit score standing agency warned that the win international sources of banks in the Kingdom may maybe well well proceed to be negative in 2025 attributable to high-cost home timeframe deposits and increased query for international currencies.
Regional outlook
In step with the diagnosis, banks in the Center East situation are expected to support sound profitability, actual liquidity, and sufficient capital buffers for their probability profiles in 2025, whereas asset quality may maybe well well serene remain actual.
In November, a dispute launched by S&P World talked about that banks in the GCC are expected to support considerable asset quality, profitability, and nice liquidity via 2025 attributable to actual capitalization and well-managed steadiness sheets.
S&P World, nonetheless, warned that heightened geopolitical tensions and a sharp tumble in oil costs may maybe well well negatively have an effect on the creditworthiness of economic establishments in the location.
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UAE
Fitch talked about that banks in the UAE will regain pleasure from favorable alternate and running stipulations in 2025 attributable to high oil costs and increased economic activities.
The diagnosis added that banks in the Emirates will quit a loan progress of around 9 p.c in 2025, a settle well above the GCC moderate but just below its Arab neighbor, Saudi Arabia.
“We attach a query to UAE banks’ funding and liquidity to remain considerable and deposits will proceed growing in accordance with lending. Liquidity will proceed to be supported by tremendous executive deposits, pushed by the sovereign’s actual win external sources space, serene-considerable fiscal metrics and routine hydrocarbon revenues,” added Fitch.
Egypt
The dispute highlighted the progress of the banking sector in Egypt and talked about that overall alternate and running stipulations for monetary establishments in the country are expected to toughen subsequent 365 days.
In step with Fitch, falling inflation, improved investor self belief, and wholesome international change liquidity stipulations are some of the significant components that will well well toughen the banking sector in Egypt in 2025.
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Bahrain
In Bahrain, credit score progress among banks is expected to be inexpensive, albeit serene modest, when when put next with GCC peers, at around 4.5 p.c in 2025.
“Fitch expects the alternate atmosphere for banks in Bahrain to remain sufficient, underpinned by some running situation enhancements. Decrease lending rates may maybe well well serene ease pressures on the sector’s company loan books, in exclaim right estate and contracting,” talked about the dispute.
The credit score standing agency predicted actual asset quality metrics for Bahraini banks in 2025, with decrease rates offering reduction to company borrowers and households and the sector profitability to remain sound.
Kuwait
In step with the dispute, the banking sector’s credit score progress in Kuwait is expected to hover between 5 p.c and 6 p.c in 2025, albeit hindered by serene-high pastime rates and completely realistic right non-oil GDP progress.
The diagnosis revealed that liquidity among Kuwaiti banks will remain considerable subsequent 365 days attributable to tremendous and actual deposits from executive-linked entities and lines from high oil costs.
Oman
Fitch revealed that Oman’s Imaginative and prescient 2040 program geared toward diversifying the country’s economy may maybe well well start extra opportunities for banks sooner or later.
“Oman’s Imaginative and prescient 2040 will provide progress opportunities for banks and recount a wholesome lending pipeline in key sectors of the economy, apart from to lop banks’ reliance on executive spending in the prolonged bustle. On the replacement hand, the absence of a deep capital market limits regain entry to for corporates to funding sources diversified than the country’s home banks,” talked about the stamp.
The diagnosis added that liquidity among Omani banks will proceed to be supported by actual executive and executive-linked entity deposits, whereas high oil costs are expected to red meat up the progress in customer deposits.
Qatar
In Qatar, the general alternate and running atmosphere for banks are projected to toughen in 2025.
The dispute revealed that the credit score progress among Qatari banks may maybe well well obtain to 5.5 p.c subsequent 365 days but will remain below that of Saudi Arabia and the UAE attributable to their in particular considerable running stipulations.
Jordan
In Jordan, the market stipulations of banks are expected to remain annoying subsequent 365 days, whereas the sector will stamp a lending progress of 3.5 p.c.
“The running atmosphere for banks in Jordan remains annoying attributable to below-doable and structurally favorite right GDP progress, and high unemployment and geopolitical risks, which negatively have an effect on tourism and exports,” concluded Fitch.
