Fitch Ratings raised the future outlook of six Saudi banks to stable from negative, and affirmed the long-term credit rating in local and foreign currencies at BBB +.
The six banks are the Arab National Bank, Banque Saudi Fransi, Alinma Bank, The Saudi Investment Bank, Al Jazira Bank and Gulf International Bank in Saudi Arabia.
Fitch’s assessment takes into account the Saudi government’s ability to support the banking system given the country’s large foreign reserves.
It also reflects a long track record of support for Saudi banks Regardless of its size, financing structure and level of government ownership.
But Fitch warned of the risks of contagion among local banks because the market is small and interconnected, which the agency saw as an additional incentive for the government to support the sector if the need arises.
This comes after Fitch raised the Kingdom’s future outlook to stable from negative on July 15 due to the rise in oil prices.
Main classification engines
And Fitch indicated that the rating engine for the six banks, is sovereign support, which leads the rating at the credit score BBB +, which is applied to all Saudi banks, as Fitch said that this reflects our view with a high probability of supporting all lenders in the country from the Saudi authorities. , if it is necessary.
Fitch expected that the reserves of the Saudi Central Bank would increase to reach 470 billion dollars in 2022-2023; The Kingdom has one of the highest reserve coverage ratios among Fitch-rated governments in more than 20 months of current foreign payments.