Fitch: Saudi Arabia's business environment is the highest-rated in the Gulf
In its latest report, Fitch Ratings confirmed the strength of the Kingdom of Saudi Arabia’s financial position, noting that the credit ratings of Saudi banks are exceptionally strong, with financial indicators showing less sensitivity to economic contraction compared to most of their counterparts in the Gulf Cooperation Council countries, reflecting the success of the Kingdom’s fiscal and monetary policies.
The agency stated in an official statement: “The business environment in Saudi Arabia is favorable and attractive for investment, as evidenced by its rating of (bbb+), the highest among the Gulf Cooperation Council (GCC) countries.” This rating comes as a culmination of a series of structural reforms undertaken by the Saudi economy in recent years.
Motivations behind the strong rating and the impact of Vision 2030
The agency noted that this advanced rating is primarily based on continued high levels of targeted government spending, ongoing economic diversification that has reduced overall dependence on oil, and significant growth in non-oil sectors within the framework of the Kingdom's Vision 2030. Progress on mega-projects has also played a pivotal role in boosting economic activity and creating substantial financing opportunities for the banking sector.
This rating is of particular importance in light of global economic challenges, as it enhances the confidence of foreign investors in the Saudi market and confirms the ability of the local economy to absorb external shocks, thus consolidating the Kingdom’s position as a leading financial and regional center in the Middle East.
Growth exceeding regional rates
In analyzing the banking sector's performance, Fitch Ratings noted that Saudi banks have experienced growth nearly double the average growth rate of their GCC counterparts since the start of the COVID-19 pandemic, demonstrating the sector's resilience and rapid recovery. The agency anticipates that annual credit growth will remain robust at around 13% in 2025 before declining slightly to between 10% and 11% in 2026.
The agency indicated that this expected slowdown in 2026 reflects the “natural saturation” of credit after years of rapid and unprecedented expansion, in addition to increased competition for funding among banks, which led to an increase in the average cost of funding in the sector by 30 basis points in the third quarter of 2025 compared to 2024. Nevertheless, these rates remain healthy and indicate market maturity.
Liquidity: The Safety Valve
The agency concluded its report by emphasizing that it still considers funding and liquidity to be among the most prominent strengths in the credit rating of banks in the Kingdom, expecting this positive situation to continue in 2026. Saudi banks have historically maintained large liquidity reserves and strong access to diverse local and international funding sources, which supports their ability to withstand the expected slowdown in growth and in a more competitive deposit market, thus ensuring the long-term stability of the Saudi financial system.
