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How Saudi Banks Are Set To Maintain Strong Profitability In 2025 Amid Credit Growth And Vision 2030

by THEFUTURE.TEAM

January 21, 2025

Saudi Arabia’s banking sector is on track for continued stability and profitability into 2025, as credit growth remains robust and lower interest rates foster an increasingly favorable lending environment. A recent report by S&P Global Ratings projects that corporate lending will drive the lion’s share of growth, while ongoing government initiatives, notably the Vision 2030 plan, are expected to fuel lending activity further.

The Credit Surge: Corporate Lending Leading The Charge

Corporate lending is poised to be the backbone of credit growth in Saudi banks. Thanks to the ambitious Vision 2030 projects, particularly in infrastructure and large-scale development sectors, demand for financing is at an all-time high. The anticipated credit growth of 10% in 2025 is largely driven by corporate financing needs as the kingdom’s private sector works to align with national goals of diversification and modernization.

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The effects of lower interest rates are already evident, as they are expected to further boost mortgage lending, adding yet another layer of growth to the financial system.

Stability Despite Rising Non-Performing Loans

Although non-performing loans (NPLs) are expected to edge up to 1.7% of total loans by 2025, up from 1.3% in September 2024, Saudi banks are well-equipped to handle the rise. Given the moderate nature of the increase and the absence of substantial write-offs, the banking sector remains resilient.

Banks in Saudi Arabia have built strong provisioning buffers, enabling them to manage any potential losses comfortably. This fortifies their position in what is likely to be a period of steady but not explosive credit growth.

The Global Landscape: International Financing For Vision 2030

As the country embarks on its ambitious Vision 2030 initiatives, Saudi banks are expected to continue leveraging international capital markets to fund the financing required for various projects. These initiatives are set to provide substantial long-term growth potential for both local and foreign lenders.

Surprising Loan Growth Signals A Thriving Sector

Saudi banks have already demonstrated impressive growth. The third quarter of 2024 saw a 3.7% quarter-on-quarter increase in loans and advances. Corporate and wholesale banking led the charge, growing by 4.4% and proving that the demand for lending within the kingdom is not just stable but accelerating.

With the ongoing strength of corporate lending, it’s clear that Saudi Arabia’s financial sector is far from reaching its peak growth potential. The financial support for Vision 2030 projects will likely continue to drive lending demand for the foreseeable future.

Vision 2030 And Non-Oil Sector Growth: A Diversified Path Ahead

Vision 2030’s focus on diversification and reducing reliance on oil revenues is showing tangible results in Saudi Arabia’s economy. The non-oil sector has posted strong growth, particularly in construction and services, driven by an expansion of the domestic workforce and increased consumer demand. The boost in the non-oil private sector has also been bolstered by a surge in export activities.

In December, the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) held steady at a strong 58.4, a modest dip from a 17-month high but still well above the 50.0 mark, indicating sustained growth in the private sector.

The Road Ahead: A Stable Path To Profitability

Looking to 2025, Saudi banks are positioned to continue benefiting from a thriving lending market. Corporate lending will remain a driving force, particularly as Vision 2030 continues to evolve and demand for financing rises. Although NPLs may see a slight increase, the banking sector’s strength in terms of provisions and a favorable credit environment will provide a cushion.

With a diversified economy and continued strong performance in the non-oil sector, Saudi Arabia’s financial institutions are set for another profitable year. As they continue to align with the kingdom’s forward-looking initiatives, Saudi banks will likely play a central role in the ongoing transformation of the kingdom’s economic landscape.

In short, 2025 looks promising for Saudi Arabia’s banks. They are well-prepared to leverage the growing demand for corporate and mortgage lending while maintaining strong profitability through their involvement in the Vision 2030 agenda.

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Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

by THEFUTURE.TEAM

June 26, 2026

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

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Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.