Prime Highlights:
- Saudi banks are expected to maintain strong loan growth in 2026, supported by Vision 2030 projects and rising financing demand.
- A stable banking system, improving economic outlook, and growing private financing opportunities continue to support sector confidence.
Key Facts:
- Banks in the Kingdom are projected to issue between $65 billion and $75 billion in new corporate loans in 2026, compared with $70 billion last year.
- Saudi Arabia’s economy is forecast to grow between 4.3% and 4.5% in 2026, supported by higher oil output, strong domestic demand, and major investment projects.
Background:
Saudi Arabia’s banking sector is expected to maintain strong lending growth in 2026, driven by robust demand linked to Vision 2030 projects, according to a report by S&P Global. Banks in Saudi Arabia are expected to provide $65–75 billion in new corporate loans next year, compared with $70 billion in the previous year.
The growth will be fueled primarily by investments in the real estate and utilities sectors. Retail lending is also set to rise, with mortgages accounting for roughly half of this segment. Analysts expect mortgage lending in Saudi Arabia to rise to about $20 billion in 2026, up from $18 billion at the end of 2025.
To support this growth, banks will continue to rely on deposits from the government and government-related entities, which now make up 32% of total deposits, while also using external funding to fill any gaps. Strong international markets and lower interest rates are expected to help Saudi banks grow.
Despite lower interest rates putting some pressure on earnings, banks are expected to stay profitable, with average returns of around 2.2% in 2026. Their financial position is strong, with Tier 1 capital at 18.4% and risk-adjusted ratios at 13.1%.
Banks remain stable, though risks like geopolitical tensions or lower oil prices remain. Overall, the economy and banking sector are steady.
