Research Reports

Saudi Arabia Banking Sector: Caught in the COVID-19 Grip

August 25 , 2020

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Executive Summary

Falling NIMs to pressurize profits Saudi Arabia banking sector report, provides an in-depth analysis of the industry and discusses about the challenges posed by the economic impact of COVID-19. The report discusses key parameters such as credit growth, asset quality, profitability and liquidity, and provides forecasts for 2020 considering the current economic conditions. The report also identifies emerging trends and profiles of listed domestic banks in addition to providing company-level forecasts for 2020 based on Marmore's proprietary research model.

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Saudi Arabia has the second largest banking industry in the GCC region by total assets and accounts for roughly 29% of the GCC's total banking assets. Credit to manufacturing, commerce and construction sectors have been trending downwards despite accounting for roughly 34% of the banking sector's total credit. Despite the significant increase in retail lending portfolio, retail NPLs at the end of 2019 were lower than 2018 levels of 0.78%. The ratio of POS transactions to ATM withdrawals has improved from 36% in March 2019 to 44% in March 2020. The trend is likely to accelerate further in the coming years. Saudi Arabia's Capital Market Authority (CMA) launched the FinTech Lab initiative to support innovation in the financial market, as well as the development of new products in the FinTech sector.

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