May 4, 2025

Saudi Banks Brace for Rising External Debt Amid Vision 2030 Push 💸🏦

Saudi Arabia’s banking sector is well-positioned to handle a rise in external debt, according to a new report by S&P Global Ratings, as financing needs increase under the Vision 2030 development agenda.

🔹 Key Figures:

  • SR371.8 billion ($100B) in loans issued by banks in 2024.
  • Only SR218.9 billion in deposits, creating a funding gap of SR152.9 billion.
  • Gross external debt reached $109.5 billion by end of 2024 — quadruple the 2018 level.
  • 59% of this debt is owed to foreign banks, mostly short-term.

🔹 Risk and Resilience:

  • S&P notes that while foreign liabilities may almost double by 2028, net external debt will still only represent 4.1% of total lending.
  • Much of the external funding comes from GCC countries, where liquidity is high.
  • Saudi banks are backed by strong state support, which S&P considers a stabilizing factor.

🔹 Mortgage Strategy:

  • To ease balance sheet pressure, banks are exploring mortgage asset sales.
  • The Saudi Real Estate Refinance Co. has already acquired SR28.8B in home loans.
  • A market for mortgage-backed securities is expected to develop gradually, despite current investor caution.

🔹 Comparison with Qatar:

  • S&P dismisses comparisons with Qatar’s 2021 debt peak of 40.6% of domestic loans, noting Saudi banks have double the asset base.

🔹 Conclusion: Despite growing external funding needs, Saudi banks remain fundamentally strong, with measured risk management, ample liquidity, and strategic support from the state — keeping them on solid ground through the Vision 2030 transformation.

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