Saudi Banks and Capital Market to Play Vital Role in Achieving Vision 2030 Goals
In a recent report by S&P Global, it was highlighted that Saudi banks and the capital market are set to play significant roles alongside the Public Investment Fund in realizing the objectives of Vision 2030. This involvement in the Kingdom’s economic diversification efforts is expected to boost leverage in both the private sector and the broader economy.
According to the report, the Saudi government’s transformation program aimed at diversifying the country’s economy will require around $1 trillion in investments over the coming years. While a portion of this investment will come from the government and the Public Investment Fund, S&P Global Ratings also anticipate substantial contributions from banks and capital markets.
The report also noted that Saudi Arabia’s banking sector is in a strong position, with solid asset-quality indicators and overall capitalization. The agency expects banks to maintain sound profitability and conservative dividend payouts, which will further strengthen their capitalization in the next one-to-two years.
Furthermore, S&P Global highlighted the growth of the capital market in Saudi Arabia, with several private companies planning potential listings on the main and parallel markets. The analysis projected a real GDP growth of 2.2 percent in 2024 and 5 percent in 2025, with the non-oil private sector playing a crucial role in this expansion.
Another report by S&P Global raised concerns about banks in Saudi Arabia seeking alternative funding options to manage the rapid increase in lending. The agency warned that this shift towards external funding could impact the credit quality of the banking sector, driven by the financing needs of Vision 2030 and sluggish deposit growth.