S&P Global underscores pivotal role of Saudi banks in
advancing the objectives of Vision 2030
A recent report from S&P Global underscores the pivotal
role of Saudi banks and the capital market in advancing the objectives of
Vision 2030. Their active involvement in the Kingdom’s economic diversification
efforts is anticipated to bolster leverage within both the Saudi private sector
and the broader economy.
According to the analysis, the Saudi government's ambitious
transformation program, aimed at diversifying the economy economically,
socially, and culturally, will require an estimated $1 trillion in investments
over several years. While a portion of this funding will originate from the
government and the Public Investment Fund, S&P Global Ratings expects
significant contributions from banks and capital markets.
Read More Unlocking
Saudi Arabia's economic potential: A deep dive into Vision 2030's success and
challenges
Although this influx of capital is expected to elevate
leverage in the corporate sector and broader economy, the exact pace and extent
remain uncertain. Nonetheless, Saudi Arabia's banking sector exhibits
resilience, marked by robust asset-quality indicators and overall
capitalization. The report predicts that banks will maintain sound
profitability and prudent dividend payouts, bolstering their capitalization in
the coming years.
S&P Global also highlights the burgeoning capital market
in the Kingdom, citing the announcement of potential listings by 13 private
companies on Saudi Arabia’s main and parallel markets from January to May 2024.
Furthermore, the analysis forecasts real GDP growth of 2.2 percent in 2024 and
5 percent in 2025, with the non-oil private sector playing a pivotal role in
driving this expansion.
Read More Saudi
Vision 2030 witnesses completion or progress of 87% projects
In a separate report earlier this month, S&P Global
observed that banks in Saudi Arabia are likely to explore alternative funding
avenues to manage the rapid increase in lending. This pursuit of external
funding could impact the credit quality of the banking sector, given the
ongoing financing needs of the Vision 2030 economic initiative and relatively
sluggish deposit growth.
Source: Arab News
0 Comments