Global pressure on Gulf banks .. and Saudi Arabia continues to finance with confidence

An economic report said: Gulf banks, especially Saudi Arabia, are facing increasing challenges in light of the escalation of global trade tensions, which may weaken an environment and affect capital flows.
The report added that while observers expect the American protectionist policies to lead to tremors in the markets, it is estimated that banks still have high financial flexibility that make them in a strong position for the confrontations of these challenges, especially in financing Vision 2030 projects.
This comes at a time when markets are witnessing sharp fluctuations and decline in oil prices, which increases the complexity of the economic scene in the region.

Tensions

According to the report, global trade tensions negatively affect global credit conditions and threaten the environment, which until recently favorable to most borrowers.
He explained that if the American administration applies the customs duties pending the proportions announced in the beginning, the economic repercussions will be wide and deep.

Market confidence

He stated that the declared suspension period for customs duties on all countries with the exception of China is 90 days.
According to the report, the prevailing uncertainty is likely to decline in the confidence of companies and consumers more and increasing concerns about institutional investment, employment, consumer spending and economic activity in general.

Global fluctuations

The report said: “We tested the potential credit risks channels of banks in the Gulf countries. Based on the virtual pressure scenarios we set,” the report said.
He added: “It seems that banks are able to deal with possible repercussions thanks to their possession of good levels of liquidity, profitability and capital.”

The greatest threat

The report indicated that market fluctuations and the reluctance of investors from risk are among the most urgent threats.
Gulf banks appear to be in a good position to counter these threats. The investment portfolios of Gulf banks are usually between 20% -25% of their total assets.
High -quality fixed income tools tend to dominate, with a limited contribution of the most dangerous investments. Therefore, we expect that the effect of capital market fluctuations on banks will remain management.

Deal with caution

The report stated that the losses are unlikely unless the banks need to liquidate some investments to deal with the flight of capital, which we do not expect to happen.
He pointed out that for some banks that are active in the advisory services sector for debt markets or capital, current fluctuations may lead to low revenues. However, these activities contribute -in average -only modestly to bank revenues.

Money markets

According to the report, some Gulf banks are more dependent on capital markets or private stock investments, and therefore may be more vulnerable to risk.

The margin lending is another source of risks with low assessments. However, the contribution of these loans to the total lending books in banks is limited and that their coverage of these loans with guarantees tends to be conservative.

American interest

The report said: In the status quo, the US Federal Reserve is expected to reduce interest rates by only 25 basis points this year and the Gulf central banks will follow its example.
He added that this would support the profitability of Gulf banks. However, if interest rates decrease more sharply, the decrease in margins and the possibility of slowing the growth of lending may weaken bank profitability.

Vision 2030

The report stated that in the Kingdom of Saudi Arabia, while the actual situation of banks seems comfortable, the inability to continue to resort to capital markets may lead to a decrease in their ability to continue financing the Kingdom’s 2030 vision projects.
He pointed out that due to the current market fluctuations, Gulf banks are likely to witness a decrease in capital flows, and some may even witness escape funds.
The report said: “To determine the size of the risk, we have developed virtual pressure scenarios that assume a major escape of external financing, including, but not limited to, 50% of the deposits of banks have escaped for non -residents and 30% of non -resident deposits. We have also assumed a decline in external assets,” the report said.

The absorption of shock

According to the report, most Gulf banking systems appear to be able to deal with virtual money escaping.

Oil and credit

The escalation of commercial tensions led to a significant decrease in oil prices. With the assumption of the oil price reaches $ 65 a barrel for the rest of 2025, while this could likely affect government spending and economic growth in the region.
In the event of more oil prices, this may mean a decrease in economic growth in both the oil and non -oil sectors, and the increase in pressure on the indicators of asset quality in banks.
Gulf banks showed strong indicators of the quality of assets before the start of tensions, as the average rate of non -non -loose loans reached 2.9% for the largest 45 banks in the region by the end of 2024.
The banks have also preserved allocations for more than 150% of the size of their troubled loans on the same date, which provides them with some protection for the absorption of additional shocks. In addition, the profitability of the Gulf banks remains relatively good, with a return on assets by 1.7% by the end of 2024.

Tolerance tests

The report said that to assess the ability of banks to withstand, two virtual scenarios have tested pressure. The first scenario assumes a possible increase in non -loose loans by 30% over the number recorded at the end of 2024, and determines the percentage of non -loose loans at at least 5%, whichever is higher.

The second scenario assumes an increase of 50% and determines the percentage of troubled loans at at least 7%.
The report expected that 16 of the 45 largest banks in the region would record cumulative losses of $ 5.3 billion in the first scenario. The losses rise to $ 30.3 billion in the second scenario.

Bank profitability

He explained that in both scenarios, the cumulative influence is less than $ 60 billion in the net income achieved by the 45 largest banks in the Gulf countries in 2024. This means that even in our worst scenarios, we still expect the shock to affect the profitability of banks and not their ability to fulfill their obligations.
The report issued by S & B Global said: “The reaction of the regulators is also important in assessing how the situation has evolved. For example, during the Kofid-19 pandemic, the organizational bodies provided facilities that helped banks to deal with uncertainty,” said the report issued by S & B Global.
The report expected to take similar measures if the impact of global trade tensions on the economies of the Gulf states exceed the current expectations.