Saudi Arabia, UAE banks to post strong credit growth in 2025: Fitch Ratings

Saudi banks will see growth that outstrips their GCC counterparts, according to Fitch Ratings
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Updated 10 December 2024
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Saudi Arabia, UAE banks to post strong credit growth in 2025: Fitch Ratings

  • Fitch Ratings projected banks in the Kingdom will witness a financing growth of around 12% in 2025
  • Report said that the gradual execution of giga-projects should continue to underpin banks’ interest

RIYADH: Banks operating in Saudi Arabia and the UAE are expected to post strong credit growth in 2025, driven by high crude prices and the expansion of the non-oil economy, according to an analysis. 

In its latest report, Fitch Ratings projected that banks in the Kingdom will witness a financing growth of around 12 percent in 2025, about twice the average of the Gulf Cooperation Council region. 

The US-based agency added that corporates will account for almost 65 percent to 70 percent of new financing among Saudi banks in 2025. 

The analysis echoes similar views to those put forward by Moody’s in November, which predicted that Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the Kingdom’s economy, could accelerate the growth of the banking sector in the country. 




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In its report, Fitch Ratings said: “The operating environment for banks in the Kingdom is underpinned by high oil prices and government spending, which support the country’s giga-projects and the Vision 2030 strategy, resulting in solid non-oil gross domestic product growth.”

It added: “Fitch Ratings forecasts real non-oil GDP growth to average a still strong 4.5 percent over 2024–2025, compared to 5 percent over 2022–2023. We expect the sector’s financial metrics to remain strong in 2025.” 

The report said that the gradual execution of giga-projects should continue to underpin banks’ interest in this segment, although the current share of giga-project-related financing is minor for most rated banks.

However, the credit rating agency warned that the net foreign assets of banks in the Kingdom could continue to be negative in 2025 due to high-cost domestic term deposits and increased demand for foreign currencies. 

Regional outlook

According to the analysis, banks in the Middle East region are expected to maintain sound profitability, solid liquidity, and adequate capital buffers for their risk profiles in 2025, while asset quality should remain stable. 

In November, a report released by S&P Global said that banks in the GCC are expected to maintain strong asset quality, profitability, and ample liquidity through 2025 thanks to solid capitalization and well-managed balance sheets. 

S&P Global, however, warned that heightened geopolitical tensions and a sharp drop in oil prices could negatively affect the creditworthiness of financial institutions in the region. 




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UAE

Fitch said that banks in the UAE will enjoy favorable business and operating conditions in 2025 thanks to high oil prices and increased economic activities. 

The analysis added that banks in the Emirates will achieve a loan growth of around 9 percent in 2025, a figure well above the GCC average but slightly below its Arab neighbor, Saudi Arabia. 

“We expect UAE banks’ funding and liquidity to remain strong and deposits will continue growing in line with lending. Liquidity will continue to be supported by large government deposits, driven by the sovereign’s solid net external assets position, still-strong fiscal metrics and recurring hydrocarbon revenues,” added Fitch. 

Egypt

The report highlighted the growth of the banking sector in Egypt and said that general business and operating conditions for financial institutions in the country are expected to improve next year. 

According to Fitch, falling inflation, improved investor confidence, and healthy foreign currency liquidity conditions are some of the major factors that could strengthen the banking sector in Egypt in 2025. 




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Bahrain

In Bahrain, credit growth among banks is expected to be reasonable, albeit still modest, compared to GCC peers, at around 4.5 percent in 2025. 

“Fitch expects the business environment for banks in Bahrain to remain adequate, underpinned by some operating condition improvements. Lower lending rates should ease pressures on the sector’s corporate loan books, in particular real estate and contracting,” said the report. 

The credit rating agency predicted stable asset quality metrics for Bahraini banks in 2025, with lower rates providing relief to corporate borrowers and households and the sector profitability to remain sound.

Kuwait

According to the report, the banking sector’s credit growth in Kuwait is expected to hover between 5 percent and 6 percent in 2025, albeit hindered by still-high interest rates and only moderate real non-oil GDP growth. 

The analysis revealed that liquidity among Kuwaiti banks will remain strong next year due to large and stable deposits from government-related entities and gains from high oil prices. 

Oman

Fitch revealed that Oman’s Vision 2040 program aimed at diversifying the country’s economy could open more opportunities for banks in the future. 

“Oman’s Vision 2040 will provide growth opportunities for banks and ensure a healthy lending pipeline in key sectors of the economy, as well as reduce banks’ reliance on government spending in the long run. However, the absence of a deep capital market limits access for corporates to funding sources other than the country’s domestic banks,” said the study. 

The analysis added that liquidity among Omani banks will continue to be supported by stable government and government-related entity deposits, while high oil prices are expected to support the growth in customer deposits. 

Qatar

In Qatar, the general business and operating environment for banks are projected to improve in 2025. 

The report revealed that the credit growth among Qatari banks could pick up to 5.5 percent next year but will remain below that of Saudi Arabia and the UAE due to their particularly strong operating conditions. 

Jordan

In Jordan, the market conditions of banks are expected to remain challenging next year, while the sector will witness a lending growth of 3.5 percent. 

“The operating environment for banks in Jordan remains challenging due to below-potential and structurally weak real GDP growth, and high unemployment and geopolitical risks, which negatively affect tourism and exports,” concluded Fitch.


OPEC+ moves to set 2027 production baselines

Updated 28 May 2025
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OPEC+ moves to set 2027 production baselines

RIYADH: OPEC+ announced on Wednesday that it will establish a framework to determine new oil production baselines for 2027, marking a significant step in its long-term planning, said an official statement.

The alliance — comprising the Organization of the Petroleum Exporting Countries and partners including Russia—has been negotiating revised production baselines for several years. These baselines serve as reference points from which member states adjust their output levels.

According to the statement issued following the group’s meeting, said it had tasked the OPEC Secretariat with developing a mechanism to assess each country’s maximum production capacity. These assessments will form the basis for 2027 production targets across all member nations.

Since 2022, the group has implemented three tiers of output cuts. Two remain in place through the end of 2026, while the third is being gradually phased out by eight participating countries. No changes were made to the group’s current production policy at Wednesday’s session.

Due to the sensitive nature of the discussions, all sources spoke on condition of anonymity.

The 2027 baselines, once finalized, are expected to guide production policy after the current round of cuts expires.

Oil prices, which dipped below $60 per barrel in April—the lowest level in four years—following OPEC+’s decision to accelerate May output and amid trade tensions triggered by US tariffs, have since rebounded to around $65.


Saudi Arabia launches advanced manufacturing center to boost industrial innovation

Updated 28 May 2025
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Saudi Arabia launches advanced manufacturing center to boost industrial innovation

JEDDAH: Saudi Arabia has launched the Advanced Manufacturing and Production Center, a key initiative aimed at accelerating the Kingdom’s industrial transformation through the adoption of advanced technologies and sustainable practices.

Unveiled on May 28, the center is set to play a central role in promoting efficiency, flexibility, and growth within the manufacturing sector. It will utilize technologies associated with the Fourth Industrial Revolution to localize production and enhance Saudi Arabia’s competitiveness on the global stage.

The initiative also supports strategic industries while aligning with the objectives of Saudi Vision 2030, the country’s long-term plan to diversify its economy. A major focus is encouraging private sector collaboration to speed up the integration of emerging technologies into industrial operations.

The launch supports the National Industrial Strategy, introduced in October 2022, which aims to increase the number of factories in the Kingdom to approximately 36,000 by 2035. The strategy is designed to attract investment, scale up local production, and strengthen non-oil exports.

The Ministry of Industry and Mineral Resources is overseeing several projects to advance the Kingdom’s industrial and logistical infrastructure, positioning Saudi Arabia as a key player in global manufacturing and trade.

“Adopting the latest industrial technologies raises the efficiency of our industrial sector and enhances its competitiveness regionally and globally,” said Khalil bin Ibrahim bin Salamah, deputy minister of industry and mineral resources for industrial affairs, in a post shared by the ministry on X.

In an accompanying video, the ministry reiterated the center’s significance in meeting national goals: “The Advanced Manufacturing and Production Center opens doors to industrial investment opportunities and stimulates the sector to adopt new manufacturing technologies within industrial facilities.”

The center is supported by several initiatives and programs, including the Future Factories Program, which aims to modernize 4,000 factories across the Kingdom. The FFP focuses on integrating advanced manufacturing systems to boost efficiency and build more resilient supply chains—particularly in critical sectors such as food and petrochemicals.

According to its official website, the center serves as a hub for industrial innovation, providing consultancy services, training, and technological solutions. It is dedicated to fostering sustainability and competitiveness across the manufacturing sector.

Through these efforts, the center is expected to significantly contribute to Saudi Arabia’s Vision 2030 goals by localizing high-tech capabilities, attracting investment, and advancing the industrial sector’s role in the nation’s economic diversification.


Closing Bell: Saudi main index rises to close at 11,052

Updated 28 May 2025
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Closing Bell: Saudi main index rises to close at 11,052

RIYADH: Saudi Arabia’s Tadawul All Share Index advanced on Wednesday, closing higher by 127.58 points, or 1.17 percent, to reach 11,052.76, reflecting broad market optimism.

Trading activity remained robust, with a total turnover of SR4.57 billion ($1.21 billion). Of the listed stocks, 202 posted gains while 44 declined.

The Kingdom’s parallel market, Nomu, also recorded gains, rising 340.91 points, or 1.28 percent, to close at 26,932.95. The market saw 48 advancing stocks against 34 decliners.

Meanwhile, the MSCI Tadawul 30 Index climbed 15.12 points, or 1.08 percent, ending the session at 1,413.70.

Fawaz Abdulaziz Alhokair Co. emerged as the session’s top performer, with its share price jumping 5.77 percent to SR16.50.

Ataa Educational Co. and Kingdom Holding Co. followed closely, gaining 5.46 percent and 5.22 percent to close at SR61.80 and SR8.66, respectively.

On the downside, United Carton Industries Co. registered the steepest decline, falling 4.87 percent to SR46.85. Banan Real Estate Co. dropped 2.4 percent to SR4.48, while Nama Chemicals Co. slipped 1.78 percent to SR27.55.

On the announcements front, Saudi AZM for Communication and Information Technology Co. disclosed it has submitted a request to transfer its listing to the main market.

Additionally, the initial public offering for Flynas Co. began on May 28 and will conclude on June 1. The offering is priced at SR80 per share, with a retail tranche comprising 10.25 million shares. According to a statement, BSF Capital is the lead manager.

Alkathiri Holding Co. announced that its subsidiary has signed a 50-year lease agreement valued at SR143 million with the Asir Region Municipality to develop a commercial and hospitality project in the city of Abha.

According to a statement published on the Saudi stock exchange, the project will feature a four-star hotel with a capacity of 180 keys, alongside retail and entertainment facilities. The development aims to boost tourism and enhance commercial services in the Asir region.

The lease will officially begin upon the land handover by the Investment Committee of the Asir Region Municipality.

Shares of Alkathiri Holding closed Wednesday’s trading session at SR2.06, marking a 1.96 percent gain.

In a separate disclosure, Mufeed Co. announced that its board of directors has recommended to the ordinary general assembly the transfer of its statutory reserve balance — totaling SR3.49 million, as reported in the financial statements for the year ended Dec. 31, 2024 —to retained earnings.


Saudi Arabia’s Asir region revitalizes 95% of stalled projects

Updated 28 May 2025
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Saudi Arabia’s Asir region revitalizes 95% of stalled projects

  • Asir is a vast region in the Kingdom with a population exceeding 2 million people
  • Interest from global players seeking early opportunities in the region’s evolving landscape has grown

ABHA: Saudi Arabia’s Asir region has successfully revitalized 95 percent of its previously delayed project, an important milestone that is strengthening investor confidence as the region moves forward with SR29 billion ($7.73 billion) worth of initiatives across various sectors.

In an interview with Arab News, Hashim Al-Dabbagh, CEO of Asir Region Development Authority, stated that a dedicated committee, chaired by Asir Gov. Prince Turki bin Talal, was formed several years ago to tackle long-standing investment challenges that had stalled progress in the region.

“The total number of cases that have been brought to this committee to address has been 63, all brought to the table,” Al-Dabbagh said.

He continued: “Of these 63 cases that have been brought to this committee to address and to solve, 60 cases have been solved, and three are in the pipeline right now, and they’re working on them, and they’re going to solve them relatively soon.”

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Of the 60 resolved, 57 were concluded with outcomes that satisfied investors, reflecting a resolution rate of nearly 95 percent.

“This committee and the work that they have done has created some very positive vibes across the investment ecosystem in Saudi Arabia, which you sense in this forum because there are some very large investors that are coming to Asir, some coming back to Asir which had not been interested in this region in the past,” Al-Dabbagh said.

The board operates in collaboration with various public and private entities, including ASDA, the Ministry of Investment, the Ministry of Tourism, the Tourism Development Fund, and King Khalid University, ensuring a unified approach to accelerating investor activity in the region.

This resolution mechanism plays a key role in supporting the region’s development strategy, which focuses on unlocking investment potential across various sectors.

“First of all, we have a strategy that drives everything that we are doing,” Al-Dabbagh said.

He added: “The strategy has been approved by the center of government, and it says that Asir should be a year-round preeminent destination, so already we know that we need to focus on the tourism sector and complementary and adjacent sectors to the tourism sector. That’s one, and that gives us a lot of momentum in working with the government ecosystem and the private sector.”

Al-Dabbagh emphasized that Asir is more than just a tourism destination, noting that it is a vast region in the Kingdom with a population exceeding 2 million people.

“Within the Asir Development Authority, we have a whole department called Economic Development Department, and they are working diligently this year on sectoral studies across the board.”

He added: “This includes, obviously, tourism-related sectors, but also other ones, so just as an example, we are looking at sports, we are looking at construction. We’re looking at fisheries and agriculture. We’re looking at renewable energy. We’re looking at mining among other sectors.”

The authority is also aligning its economic strategy with educational institutions to ensure the region’s workforce is equipped to meet the demands of upcoming sectors.

“We are working closely with King Khalid University, the TVTC (Technical and Vocational Training Corp.), Bishop University, and other educational institutions to align the strategies and to make sure that their graduates are able to find jobs in the opportunities that are going to be realized as we realize this strategy,” he said.

On attracting investments, Al-Dabbagh stated: “What I call the investment ecosystem in Asir, it’s the framework that we use to assess investments, is comprised of three components. The first component is the Invest in Asir committee, and that’s headed by Prince Turki in his capacity as the chairman of the Aseer Development Authority and includes all the public and private sectors.”

He explained that the region offers a compelling opportunity for early movers due to its untapped potential, strategic government backing, and the ability to enter key sectors before they reach full maturity, providing investors with a critical advantage in shaping long-term development.

“Asir relative to those mature, tourism destinations, offers relatively less mature areas, so when they’re coming in, they’re coming in early and they’re going to have a ... not a first mover advantage, but an early mover advantage compared to people that are going to see this place for five years or 10 years down the road when all these incumbents are already on the ground.”

Attracting FDIs

Foreign direct investment is also gaining momentum in Asir, with growing interest from global players seeking early opportunities in the region’s evolving landscape.

“One of the speakers in today’s forum was Fatih (who is managing partner of FTG Development), and they are looking at an investment worth billions in Asir. That is just one example, and foreign direct investors, they look for successful local investors to partner with,” Al-Dabbagh said.

He concluded: “Our doors are open. We’re very happy to meet with the investors from anywhere.”


EU lifts economic sanctions on Syria

Updated 28 May 2025
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EU lifts economic sanctions on Syria

BRUSSELS: The European Union lifted economic sanctions on Syria on Wednesday in an effort to support the country’s transition and recovery after the toppling of former president Bashar Assad.
The move follows a political agreement reached last week by EU foreign ministers to lift the sanctions.
The EU will keep sanctions related to Assad’s government and restrictions based on security grounds, while also introducing new sanctions against individuals and entities connected to a wave of violence in March, the Council said.
“The Council will continue monitoring developments on the ground and stands ready to introduce further restrictive measures against human rights violators and those fueling instability in Syria,” it added.