...DUBAI (S&P Global Ratings) June 29, 2022--S&P Global Ratings said today that Saudi banks are facing less short-term liquidity pressure thanks to the reported Saudi riyal (SAR) 50 billion liquidity support from the Saudi Central Bank (SAMA). However, the system will need private and public sector deposits to have the strength needed to sustain the pace at which it is expanding its lending book. In the absence of commensurate deposit growth, lending growth may slow, contrary to our expectations of rapid growth, or banks may resort to external liabilities amid less supportive market conditions than a few months ago. The pressure on banks' liquidity stems from deposit growth remaining lower than lending expansion over the past few years. This caused the loan-to-deposit ratio to hit the 100% mark on March 31, 2022. Nevertheless, the banking system continues to be in a net external asset position, underpinning our view of the strength of the system's funding profile (see chart 1). What's more,...
