Saudi banks outlook stable amid solid economic growth in 2020: Moody’s

Credit rating agency Moody’s assigned a stable outlook for banks in Saudi Arabia, supported by an estimated 2.5% economic growth in 2020 on the back of a resurgent energy sector.

“Profitability of banks will remain strong, but will be pressured by lower interest rates,” it noted.

Furthermore, asset quality will remain stable despite a modest increase in problem loans, the report added.

Government spending programs will push average non-hydrocarbon GDP growth to 2.6% in 2020, providing favorable operating conditions for the region's banks," said Nitish Bhojnagarwala, Vice President-Senior Credit Officer at Moody's.

Non-performing loans in the region will moderate to 3.5% of total loans by the end of 2020, from an estimated 3.3% in 2019, the report said.

On the regional level, Moody’s assigned a negative outlook for Oman, citing weakening asset quality and limited access to funding and liquidity, while it maintained a stable outlook for Bahrain, the UAE and Kuwait.