Arab News, Saturday, Dec 26, 2020 | Jamadi Al Awwal 11, 1442
Saudi banks backed by strong mortgage loans amid COVID-19, lower oil prices
Saudi Arabia:
Fitch Ratings
said in a report that the strong loan growth of 12.7 percent seen in the first
ten months of 2020 from the sustained momentum in retail mortgages, combined
with an operating environment showing signs of recovery supported Saudi banks’
financial metrics in the face of the repercussions of COVID-19 pandemic and the
decline in oil prices.
It added that the
sector’s reported asset-quality metrics were stable in the first nine months of
2020, supported by government forbearance measures and high growth underpinned
by pre-pandemic corporate deals and retail mortgages.
Fitch also noted that
Saudi banks’ weighted average Viability Rating (VR) of ‘bbb+’ remains the
highest in the GCC region.
It indicated that the
operating environment for Saudi banks has been more challenging since the first
quarter of this year due to the impact of the COVID-19 pandemic and lower oil
prices, adding that this resulted in heightened pressure on the sector’s asset
quality and profitability.
The sector remains
well-capitalized, said Fitch, adding that balance sheets of Saudi banks remain
very liquid, as the sector’s liquidity has been supported by large amounts of
government deposits since the first quarter.