S&P Global: Saudi Banks and Capital Market to Contribute Significantly to Vision 2030's $1 Trillion Investment, Boosting Economy and Leverage
According to a report by S&P Global, Saudi banks and the capital market will play a significant role in contributing to the objectives of Vision 2030, alongside the Public Investment Fund.
The report highlights that their involvement in the Kingdom's economic diversification efforts will strengthen the private sector and the economy as a whole.
The Saudi government's transformation program, which aims to diversify the economy, requires approximately $1 trillion in investments over several years.
While some of this sum will come from the government and the Public Investment Fund, S&P Global expects banks and capital markets to contribute a substantial amount as well.
The text discusses the expected increase in leverage in Saudi Arabia's private sector and economy due to the growth of the banking sector and expansion of the capital market.
The banking sector is in a robust position with strong asset quality indicators, overall capitalization, sound profitability, and conservative dividend payouts.
Thirteen private companies have announced potential listings on Saudi Arabia's main and parallel markets from January to May 2024.
The economy is projected to grow at a real Gross Domestic Product rate of 2.2% in 2024 and 5% in 2025, with the non-oil private sector being a significant contributor to this expansion.
The increase in leverage in the corporate sector is uncertain.
S&P Global recently reported that due to the rapid expansion in lending for Saudi Arabia's Vision 2030 economic initiative, banks in the country may seek external funding sources.
This pursuit of external funding could potentially affect the credit quality of the Saudi Arabian banking sector.