KPMG: Upsurge in capital demand expected to further fuel strong interim performance of Saudi banks

KPMG: Upsurge in capital demand expected to further fuel strong interim performance of Saudi banks

- In the first nine months of 2022, issuances of US$3.8 billion (SAR 14.30 billion) have been conducted.

- Towards the year-end, banks will continue to mitigate enhanced market risk due to volatility in the interest rate.

- Over the next three years, risks will be more interconnected as emerging technology rises.

(RIYADH)- Banks in Saudi Arabia are expected to continue to prioritise their liquidity demands for the coming year despite enhanced earnings, through focusing on raising Tier I capital in the form of debt issuances, notably Sukuk, according to KPMG, a leading provider of audit, tax and advisory services in Saudi Arabia.

In the first nine months of 2022, issuances of US$3.8 billion have been conducted and this is expected to grow in coming months as banks are fuelling the increased demand in the public and private sector.

“An upsurge in Tier I capital issuance has been noted across the banking participants as banks are further strengthening their equity base,” commented Khalil Ibrahim Al Sedais, Office Managing Partner – Riyadh at KPMG in Saudi Arabia.

The regulatory agenda is also ensuring a robust capital base through the implementation of Basel 4 as final rules have emerged. While the implementation was delayed due to the pandemic,