Bank profitability will remain strong this year despite lower interest rates, says S&P.
Saudi banks are expected to extend $65-$75 billion in new corporate loans in 2026, driven by high investments in the real estate and utilities sectors, S&P Global said in a new report.
“We expect that corporate lending will continue to benefit from the opportunities arising from Vision 2030 projects,” the report said.
Corporate loans reached $70 billion between December 31, 2024, and November 30, 2025.
Retail lending, especially mortgages, is likely to grow amid continued declines in interest rates. Mortgages constitute roughly half of total retail lending, which rose by 5% in the year to November 30, 2025.
Retail lending is expected to rise by nearly $20 billion in 2026 from $18 billion as of Nov. 30, 2025, S&P said.
According to the rating agency, Saudi banks’ profitability will remain strong this year despite lower interest rates.
Strong lending growth is expected to partly mitigate the pressure on net interest margins, which is likely to contract marginally.
Banks’ return on average assets is expected to dip slightly to 2.2% in 2026 due to the contraction and higher cost of risk.
S&P said all the Saudi banks it rates have stable outlooks and their ratings are unlikely to change in 2026.
Geopolitical turmoil and decline in oil prices are the main risks, it added.
Quantitative easing has faced recent criticism for causing large central bank losses and contributing to…
Artificial intelligence is already reshaping the economy and society. This column analyses how AI affects…
A record number of young people are approaching working age in emerging markets and developing…
Poverty is not a static condition but a dynamic process. Yet the at-risk-of-poverty rate, which…
Governments increasingly look to capital income for both revenue and redistribution. This column compares two…
Of the estimated 244 million firms in Africa, 232 million (95%) are own-account businesses consisting of…