Saudi banks gave out $100 billion in new loans in 2024, but the risks are still under control, says S&P

Saudi banks gave out $100 billion in new loans in 2024, but the risks are still under control, says S&P

In 2024, Saudi banks gave out $99.2 billion (SAR 371.8 billion) in new loans, which was much more than the $58.4 billion (SAR 218.9 billion) they received in new deposits. This left a gap of over $40.7 billion (SAR 152.9 billion), which the banks are covering by borrowing money from outside sources.

Saudi Banks and Foreign Debt

Even though Saudi banks have recently borrowed more from outside the country, they are still in a good position to manage it. According to a report from S&P Global, their total net foreign debt is still small—about $9.1 billion (SAR 34 billion). By 2028, foreign debt is expected to make up only 4.1% of total lending, which is still a small part.

This increase in foreign borrowing is helping Saudi banks meet growing financial needs under the country’s Vision 2030 plan, especially in lending to businesses, as the home loan market has slowed since 2022.

Since local funding isn’t enough, Saudi banks are now getting more money from global financial markets.

Where the Foreign Debt Is Coming From

S&P expects Saudi Arabia’s foreign debt to almost double by 2027. This is mainly because of money borrowed between banks and short-term deals called “repo lines.” These made up 55% of the rise in foreign debt in 2024. The rest came from Saudi banks issuing debt in international markets, either directly or through their branches in global financial centers.

By the end of 2024, about 59% of Saudi banks’ foreign debt came from international banks. This could be risky because this type of borrowing is usually short-term and can be unstable.

Saudi banks’ claims (what they are owed) from foreign banks compared to what they owe dropped a lot—from 109% in 2022 to 54% in 2024. This shows they are relying more on foreign borrowing, which could be risky if investors suddenly pull their money out.

Still, S&P noted that almost half of the deposits from foreign banks come from countries in the Gulf region, where banks are usually flush with cash. Also, some of the money Saudi banks owe is backed by collateral, which reduces the risk.

Not Like Qatar

Some people compare Saudi Arabia’s rising foreign debt to Qatar’s past borrowing. Qatar’s debt grew a lot before the 2022 FIFA World Cup, going from 5.3% of local loans in 2014 to 40.6% in 2021. Although it fell to 33% by the end of 2024 after new rules were introduced, Qatar once had a debt of nearly $197 billion. The risks of this were seen in 2017 during a regional crisis when over $20 billion left the country, and the government had to step in with $40 billion to support the banks.

By contrast, Saudi Arabia’s total foreign debt was $109.5 billion at the end of 2024, up from $29.5 billion in 2018. But since Saudi banks are nearly twice as big as Qatar’s, this level of debt is still considered manageable.

Saudi Arabia’s Vision 2030 plan is creating more demand for funding, but with foreign debt staying low and strong government support, the risk of a Qatar-style crisis seems small. Still, S&P says banks should stay careful.

Published: 1st May 2025

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