Fitch ratings has just released a special report detailing the Saudi banking sector outlook in 2008. It states that the Saudi banking boom briefly stalled in 2007 due to lower sector profitability. Future outlook for the sector remains promising due to expanding private sector credit volumes and sustainable revenue growth.
Some interesting facts:
- Economic risk remains moderate
- Rising inflation could have negative implications on consumer spending, private sector investment, asset growth, loan repayments
- Sector challenges include the Saudi Arabian Monetary Agency’s restrictions on consumer loans and the increasing competition from foreign entrants
- Saudi banks are delaying new debt issues, this has not caused any funding pressure
- Higher cost of funding and pressure on margins are major concerns
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