Rapid credit growth has hit Saudi banks’ liquidity: S&P

Rapid credit growth has hit Saudi banks’ liquidity: S&P

Credit growth, which rose rapidly in the low-interest rate era, is seen slowing, along with mortgage loan growth, amid rising rates and as the market saturates, according to the rating agency

The Saudi banking sector’s loan-to-deposit ratio rose to 102 per cent in the third quarter of 2022 from 85 per cent at the end of 2018. — Reuters

By Reuters Published: Mon 30 Jan 2023, 4:21 PM

S&P Global Ratings said on Monday that rapid credit growth in Saudi Arabia has reduced banking liquidity and it was unclear whether the government would boost deposits with the banking system to lessen pressure.

While corporate lending is seen picking up due to projects linked to the “Vision 2030” agenda to diversify away from oil, “funding availability will likely be a constraint for the first time in a while,” S&P said in its Saudi banking sector 2023 outlook.

Credit growth, which rose rapidly in the low-interest rate era, is seen slowing, along with mortgage loan growth, amid rising rates and as the market saturates.

The Saudi banking sector’s loan-to-deposit ratio rose to 102 per cent in the third quarter of 2022 from 85 per cent at the end of 2018, “owing to lagging deposit growth, mostly from the