��������Ƶ

RIYADH: ��������Ƶ’s banking sector is set to maintain profitability this year, with lending projected to grow by 10 percent, driven by corporate loans linked to Vision 2030 projects, according to a new analysis. 

In its latest report, S&P Global said that stable credit growth, fueled by lower interest rates and a supportive economic environment, will underpin the sector’s performance. 

The ��������Ƶ Banking Sector Outlook 2025 report projects that credit growth will bolster banks’ profitability, stabilizing the return on assets at 2.1 to 2.2 percent — aligning with its 2024 estimates. 

The growth is. part of the Kingdom’s spending on Vision 2030 programs, which has increased at an annual rate of 33.8 percent since the initiative’s inception, revealed Saudi Finance Minister Mohammed Al-Jadaan in a statement in November. 

“We expect Saudi banks will continue resorting to international capital markets to help fund growth related to Vision 2030,” said Zeina Nasreddine, credit analyst at S&P Global Ratings. “Banks are poised for stable profitability in 2025 as the volume effect compensates for lower margins.” 

The analysis aligns with data from the Saudi Central Bank, which reported a 13.33 percent year-on-year increase in bank loans to SR2.93 trillion ($782 billion) in November, the highest growth rate in 22 months. Corporate loans were the main driver, rising 17.28 percent to SR1.58 trillion. 

S&P Global’s report also said that mortgage lending in the Kingdom is set for growth, supported by lower interest rates and expanding demographics driving demand in the residential real estate sector. 

Credit losses are expected to range between 50 and 60 basis points over the next 12 to 24 months, supported by banks’ strong provisioning buffers. 

External funding needs will persist due to Vision 2030 investment requirements, though recent mortgage-backed securities initiatives could provide some relief, the agency said. 

“NIM (Net interest margin) is expected to drop by 20- 30 bps by the end of 2025 relative to 2023 as SAMA follows the Fed’s rate cuts to maintain its currency peg,” said S&P Global. 

The report anticipates nonperforming loan formation will remain slow in 2025, with NPLs increasing to 1.7 percent of systemwide loans by the end of the year, up from 1.3 percent in September, owing to fewer write-offs. 

S&P Global said that Saudi banks are well-capitalized, ensuring their creditworthiness, adding that earnings generation is sufficient to support asset growth, with the dividend payout ratio expected to average 50 percent in 2025. 

��������Ƶ is projected to witness an average gross domestic product growth of 4 percent between 2025 and 2027, compared to 0.8 percent in 2024. 

The US-based agency further said that Vision 2030 initiatives are anticipated to drive medium-term non-oil growth, fueled by increased construction activities and a growing services sector supported by rising consumer demand and an expanding workforce. 

The report also highlighted the Kingdom’s booming tourism sector, with growth in the hospitality industry driven by improved visa processes and enhanced leisure options. 

JEDDAH: Saudi Investment Recycling Co. and the Kingdom’s the Helicopter Co. have partnered to boost sustainability efforts and develop innovative waste management solutions.

The two companies, operating under the Saudi Public Investment Fund, signed a memorandum of understanding that highlights their commitment to advancing sustainable aviation practices and reducing environmental impact, supporting the Kingdom’s transition to a circular economy in line with Vision 2030.

As part of its 2035 goals, SIRC aims to divert 85 percent of industrial hazardous waste from landfills through recycling and treatment.

The waste sector also targets diverting 60 percent of construction and demolition waste, with 12 percent recycled, 35 percent reused, and 13 percent treated.

Under the partnership, the companies will collaborate on technology-driven operations and expand THC’s services into new sectors that align with sustainability objectives, according to the Saudi Press Agency.

Ziyad Al-Shiha, SIRC CEO, described the partnership as a step toward driving innovation, cutting emissions, and ensuring long-term environmental safety for the sector.

“This collaboration strengthens the Kingdom’s leadership in the global green economy and paves the way for a more sustainable future,” Al-Shiha said, adding that the deal aligns with broader efforts to position ��������Ƶ as a leader in sustainability and green economic initiatives.

Commenting on the collaboration, Arnaud Martinez, CEO of THC, said the initiative is part of his company’s strategy to minimize its carbon footprint.

Martinez added that the agreement is about turning ambitious ideas into tangible achievements that contribute to a sustainable future for aviation and the environment.

THC posted on its X account: “We are pleased to sign a memorandum of understanding with the Saudi Investment Recycling Co., with the aim of enhancing common interests in the waste management and recycling sector, and various environmental sectors in line with achieving the goals of Vision 2030.”

The investment recycling company, the largest industrial waste management company in the Gulf Cooperation Council with a fully integrated platform to handle, store, transport, treat, and safely dispose of the hazardous waste generated by industries, plans to divert 100 percent of municipal solid waste, recycling 81 percent and processing 19 percent for waste-to-energy purposes.

These efforts align with the ambitious targets set by the Waste Management National Regulatory Framework for 2035, including a 13-million-tonne reduction in carbon dioxide emissions, attracting SR6 billion ($1.6) billion in foreign investments, creating 23,000 jobs, and contributing $9.9 billion to the national gross domestic product.