Fitch: Saudi Arabian Banks Recovering Well from Pandemic "Covid-19" Pressures

The pandemic’s impact (Covid-19) on Saudi Arabian banks has been contained and pressures on the operating environment have largely eased, says Fitch Ratings in a new peer review.

The sector’s economic activity is recovering well, supported by soaring oil prices that underpin government spending.

The banks’ financial metrics have mostly stabilised and Fitch expects these to be further supported by higher interest rates in 2022–2023.

These positive trends were underpinned by government support measures that included interest-free deposits, and by continued strong loan growth in 2020 and 2021 (14.9% and 15.5%, respectively) that was boosted by the sustained momentum in retail mortgages.

Delayed recognition of impairments is no longer a key risk as deferral measures were terminated at end-1Q22.