Saudi National Bank

The stable outlook reflects our expectations that SNB will maintain solid capitalization while keeping risks associated with lending growth in check. We also expect that SNB will sustain its underwriting standards, with minimal government interference, over the next 12-24 months. A negative rating action could be triggered by: A significant deterioration in SNB's asset quality; Higher government interference in decision-making that leads to significant risk build-up on SNB's balance sheet; or Weaker capitalization, with the RAC ratio dropping below 10%. A positive rating action appears remote in the next 12-24 months since it requires either a simultaneous improvement in SNB's intrinsic creditworthiness and an upgrade of the Saudi sovereign by one notch; or at least a two-notch sovereign upgrade. Our

...We expect Saudi National Bank's (SNB's) financing book to continue expanding thanks to the opportunities created by implementing Vision 2030. We believe that lending for infrastructure projects under Vision 2030, and to a lesser extent residential mortgages, will drive about 10%-12% financing growth for SNB over 2022-24. We expect the bank's cost of risk to increase slightly over the next two years. We forecast about 50-60 basis points (bps) cost of risk for SNB in 2022-2024, compared with 38 bps in the first nine months of 2022. Higher interest rates, global economic slowdown, and the delayed impact of the pandemic will likely generate additional provisioning needs over the next 12-24 months....

Full Report