Saudi National Bank

The stable outlook reflects our expectations that SNB will retain a solid capital base and that the bank will successfully manage the risks associated with integration and further lending growth. We also expect that SNB will maintain strong underwriting standards over the next 12 to 24 months. The likelihood of a downgrade could build if integration-related risks start to hamper operations, or if SNB accumulates material concentrations on riskier sectors, including real estate and construction projects. We could lower the rating if we believe government influence is exerted on lending decisions, or if capitalization trends are weaker than we currently expect. With over 90% of the bank's lending in Saudi Arabia, we view the likelihood of an upgrade as remote.

...We expect residential mortgages to drive growth for Saudi National Bank (SNB) over the next couple of years. S&P Global Ratings expects SNB's financing growth to expand by 4%-6% for 2021, followed by 10% growth in 2022, driven primarily by around 25%-30% annual growth in residential mortgages. The growth in mortgages will be partially offset by expected repayments in 2021, leading to lower overall growth, compared with 15% for the Saudi banking sector. New lending could also emanate from the government's Vision 2030 economic development plan, but we expect the bank will continue to operate on a fully commercial basis. SNB is more than 50% owned by the government of Saudi Arabia. As the largest bank in the Kingdom, we consider that a more visible public policy role could develop gradually. Nevertheless, we expect that the bank will continue to make lending decisions on a commercial basis, thereby containing any associated concentration risks. We expect capitalization will remain strong....

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