{"id":96678,"date":"2025-05-05T00:00:00","date_gmt":"2025-05-05T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2025\/05\/05\/sp-global-provides-its-two-cents-on-saudi-banks-external-debt\/"},"modified":"2025-05-05T00:00:00","modified_gmt":"2025-05-05T00:00:00","slug":"sp-global-provides-its-two-cents-on-saudi-banks-external-debt","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2025\/05\/05\/sp-global-provides-its-two-cents-on-saudi-banks-external-debt\/","title":{"rendered":"S&P Global provides its two cents on Saudi banks\u2019 external debt"},"content":{"rendered":"

<\/strong>Saudi banks have been racking up their external funding over the past three years<\/strong> as local financing sources proved to be insufficient to cover domestic demand; however, S&P Global Ratings doesn\u2019t expect the rising external debt to \u201ctranslate into significant vulnerabilities for Saudi banks,\u201d the credit rating agency wrote in a recent report seen by EnterpriseAM.<\/p>\n

Funding from local sources is no longer enough to meet the Kingdom\u2019s ambitious plans<\/strong> as set out in the state\u2019s Vision 2030 program, with Saudi banks having increasingly tapped international capital markets for funding. Banks\u2019 net external asset position slipped down to a smaller surplus of SAR 34 bn by the end of 2024, S&P wrote, adding that it expects foreign liabilities to almost double by 2028. However, the agency predicts the Kingdom\u2019s banks\u2019 net external debt position to remain at around 4.1% of total lending by that point, which it says is a \u201cmanageable level.\u201d<\/p>\n

Interbank liabilities were the main contributor behind banks\u2019 debt in 2024<\/strong>, accounting for 55% of the overall increase in the external gross debt last year. The remainder primarily came from issuances in international capital markets, either directly or through Saudi banks' branches operating in global liquidity centers.<\/p>\n

Meanwhile, 59% of Saudi banks\u2019 external debt was owed to foreign banks by the end of <\/strong>last year<\/strong>, which could pose a potential risk as these funding sources \u201ctend to be generally shorter-term and potentially more volatile than capital market issuance.\u201d In addition, the ratio of Saudi banks\u2019 foreign assets to their foreign liabilities fell to 54% in 2024 from 109% in 2022 \u2014 which could, in turn, expose Saudi banks to outflows driven by foreign investors\u2019 appetites.<\/p>\n

BUT- S&P doesn\u2019t see this as a major concern<\/strong>, citing that nearly half of the deposits come from GCC countries, where banks have plenty of liquidity.<\/p>\n

More is being done to meet the financing needs for Vision 2030 goals:<\/strong> Banks have turned to mortgages as a means of creating financing headroom for the Kingdom\u2019s Vision 2030 ambitions, with lenders shifting some assets off their balance sheets either by divest mortgages to the Saudi Real Estate Refinance Company or by using securitization to move them off their balance sheets. Mortgages made up some 23% of all loans as of 2024, according to S&P. <\/p>\n

That\u2019s not all that\u2019s being done, however: <\/strong>The Kingdom\u2019s banks, led by the Saudi National Bank, have reportedly been looking<\/a> to begin selling non-performing loans (NPLs) through a number of securitization agreements, with the move aiming to free up room for financing the Kingdom\u2019s gigaprojects. <\/p>\n","protected":false},"excerpt":{"rendered":"

The agency doesn\u2019t expect the rising external debt to \u201ctranslate into significant vulnerabilities for Saudi banks\u201d<\/p>\n","protected":false},"author":1,"featured_media":96679,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2617],"tags":[19,57,10,1002],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-96678","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-banking","tag-debt-watch","tag-enterpriseam-ksa","tag-sp-global","wpautop","entry"],"acf":{"mongo_id":"074a40ac-5f61-4a02-8d97-6efd6b7e3b4e","order":"8","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/3\/906.jpg","photo_position":"above","homepage_title":"","full_issue_title":"S&P Global provides its two cents on Saudi banks\u2019 external debt","related_issue":[96664],"teaser":"The agency doesn\u2019t expect the rising external debt to \u201ctranslate into significant vulnerabilities for Saudi banks\u201d","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/5\/.d23beecb-c673-4309-8a12-e6ec9bd337ae.mp3"},"yoast_head":"\nS&P Global provides its two cents on Saudi banks\u2019 external debt - 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