S&P Global sees 10% Saudi bank lending growth in 2026

Saudi banks’ surplus declined slightly, reflecting a sharp rise in external debt over past two years: S&P

S&P Global Ratings said Saudi banks’ lending growth is expected to remain strong at around 10% in 2026, indicating that banks will continue to increase their external borrowing.

In a report, the agency said Saudi banks’ surplus declined slightly, reflecting a sharp rise in external debt over the past two years, alongside continued large overseas investments.

It noted that banks’ net external debt rose fivefold to $54.6 billion by the end of 2025, up from $9.1 billion at the end of 2024.

On the potential credit impact of a possible escalation between the United States and Iran, S&P expects the effect to be contained and limited in scope and duration, similar to June 2025 events.

Based on the latest disclosures from regional central banks and updated assumptions, the agency reassessed banks under a severe stress scenario involving external funding outflows, concluding that most Gulf banking systems could absorb such outflows using their liquid assets.