Al Rajhi Bank

The positive outlook on ARB reflects the positive outlook on the sovereign ratings, given the bank's intrinsic creditworthiness and high systemic importance in Saudi Arabia. We could raise the rating if we took a similar action on the sovereign ratings. We could revise the outlook to stable in the next 12 months if we were to take the same action on the sovereign ratings. Our anchor for a commercial bank operating in Saudi Arabia is 'bbb'. Saudi Arabia's accelerated non-oil sector investment and substantial increase in consumption will keep growth relatively strong. We expect GDP to rise by an average of 3.3% per year over 2024-2027 and the non-oil sector to contribute about 60% of GDP. We expect credit growth

...Al Rajhi faces slower credit growth, given tighter liquidity and higher funding costs in the market. S&P Global Ratings expects Al Rajhi Bank (ARB) to report slower credit growth of 6% in 2024, compared with a compound annual growth rate (CAGR) in lending of 37% for 2020-2022. The slower anticipated growth is due to higher funding costs, high interest rates, and management's decision to preserve margins. Strong lending growth over 2020-2022 was primarily driven by mortgage loans, which accounted for 40% of total loans in 2023. The bank aims to continue growing its mortgage book, while at the same time funding projects relating to infrastructure, industrials, and energy, along with government-related projects and, to a lesser extent, those in the construction sector....

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