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High Interest Rates to Boost Profitability of Saudi Banks

Saudi Arabia is working to create the appropriate environment to ensure the durability of financial banks and the diversity of their products (Asharq Al-Awsat)
Saudi Arabia is working to create the appropriate environment to ensure the durability of financial banks and the diversity of their products (Asharq Al-Awsat)
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High Interest Rates to Boost Profitability of Saudi Banks

Saudi Arabia is working to create the appropriate environment to ensure the durability of financial banks and the diversity of their products (Asharq Al-Awsat)
Saudi Arabia is working to create the appropriate environment to ensure the durability of financial banks and the diversity of their products (Asharq Al-Awsat)

Fitch Ratings predicted that higher oil prices and interest rates will enhance the profitability of Saudi banks during 2022-2023.

This comes at a time when the loan-to-deposit ratio of Saudi banks is at its highest level in 15 years.

Fitch said that a 200bp increase in interest rates would boost Fitch-rated Saudi banks’ operating profit by 14%.

Fitch also expected that the costs of financing Saudi banks will decline after SAMA pumped 50 billion riyals into the banking system last June.

In other news, Saudi Arabia’s finance companies have demonstrated outstanding performance as their total assets reached SR67 billion ($17.85 billion) in 2021, a 26 % increase from 2020, according to a report by the Saudi Central Bank, also known as SAMA.

Aggregate capital surged 37% to SR19.6 billion in 2021 from SR14.3 billion in 2020.

Net profits also skyrocketed by 114% in 2021, achieving SR1.9 billion, the report stated.

The credit portfolio stood at SR68.1 billion at the end of 2021, a 26 % rise from its value in 2020.

New financing provided during 2021 amounted to SR25.4 billion, a 47 % increase from 2020.

Shareholder’s equity increased 30% to SR25.5 billion in 2021 compared to SR19.6 billion in 2020, the report added.

Looking at net profits breakdown by type of finance company, the non-real-estate ones have recorded SR1.4 billion while real estate finance companies received a net profit of SR0.4 billion in 2021.

Moreover, the share of non-real-estate finance companies in the total credit portfolio was 62% versus 38% for real estate finance ones.

The breakdown of credit portfolio by customer segment is 75% for retail customers, 22% for micro, small and medium enterprises, and 3% for corporates.

In the case of credit portfolios as per primary sectors, residential real estate made up 32%, followed by auto-finance loans at 27% and personal credit at 21%.

Evaluating the credit portfolio breakdown by economic activity, the top three sectors with the highest shares were trade at 21%, construction at 20%, services at 14%, and transportation and telecommunications at 9%.

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Business

Türkiye TPAO, Shell Sign Deal to Carry out Exploration Work offshore Bulgaria

A Shell logo is seen at a gas station in Buenos Aires, Argentina, March 12, 2018. (Reuters)
A Shell logo is seen at a gas station in Buenos Aires, Argentina, March 12, 2018. (Reuters)
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Türkiye TPAO, Shell Sign Deal to Carry out Exploration Work offshore Bulgaria

A Shell logo is seen at a gas station in Buenos Aires, Argentina, March 12, 2018. (Reuters)
A Shell logo is seen at a gas station in Buenos Aires, Argentina, March 12, 2018. (Reuters)

Türkiye Petrolleri (TPAO) has signed a partnership agreement with Shell to carry out exploration work in Bulgaria's maritime zone, the Turkish energy ministry and British oil major said on Wednesday.

European Union member Bulgaria, which had been totally dependent on Russian gas until 2022, has been seeking to diversify its gas supplies and find cheaper sources, Reuters reported.

TPAO and Shell will jointly explore the Khan Tervel block, located near Türkiye's Sakarya gas field, and will hold a five-year licence in Bulgaria's exclusive economic zone, Minister Alparslan Bayraktar said.

Shell will continue as operator of the block, while TPAO will take a 33% interest in the licence, a Shell spokesperson said.

Since the start of this year, TPAO has signed energy cooperation agreements with ExxonMobil, Chevron and BP for possible exploration work in the Black Sea and the Mediterranean.

In April, Shell signed a contract with Bulgaria's government to allow the oil major to explore 4,000 square metres in the block.

Business

Saudia Signs Strategic Partnership Agreement with Six Flags and Aquarabia Qiddiya City

udia will develop special travel packages designed to enable visitors to experience world-class attractions - SPA
udia will develop special travel packages designed to enable visitors to experience world-class attractions - SPA
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Saudia Signs Strategic Partnership Agreement with Six Flags and Aquarabia Qiddiya City

udia will develop special travel packages designed to enable visitors to experience world-class attractions - SPA
udia will develop special travel packages designed to enable visitors to experience world-class attractions - SPA

Saudia Airlines has signed a five-year strategic partnership with Six Flags and Aquarabia Qiddiya City, becoming the official premier partner exclusively in the airline category.

As part of the partnership, Saudia will develop special travel packages designed to enable visitors to experience world-class attractions. The collaboration also brings the spirit of Six Flags and Aquarabia Qiddiya City to the skies through special aircraft branding across Saudia’s fleet, SPA reported. 

Chief Marketing Officer of Saudia Group Khaled Tash said in a press release: "Saudia is committed to supporting national development projects as part of its contribution to Vision 2030, aligned with our strategy to bring the world to the Kingdom. Partnerships of this scale with national partners play a key role in positioning Saudi Arabia as a leading global destination for entertainment and tourism."

Park President of Six Flags and Aquarabia Qiddiya City Brian Machamer added: "Our partnership with Saudia not only reflects a shared ambition to connect the Kingdom to the world through world-class entertainment experiences, but strengthens our ability to attract visitors from around the world and realize our vision of setting a new global benchmark for immersive, world-class theme park entertainment and reinforcing Saudi Arabia’s growing presence on the global tourism stage."

Six Flags Qiddiya City sets a new benchmark for exceptional entertainment regionally and globally. Spanning six iconic themed lands, the theme park takes visitors on an immersive journey across 28 rides and attractions designed to world-class standards. Beyond the scale and diversity of its offerings, Six Flags Qiddiya City stands out for pushing the boundaries of engineering and entertainment, featuring five exclusive, record-breaking rides that have redefined global benchmarks. Leading these innovations is Falcons Flight, the roller coaster that has captured global attention as the fastest, tallest, and longest in the world.

Aquarabia Qiddiya City delivers a distinctive aquatic entertainment experience, offering 22 rides and water attractions, along with a man-made river designed for both relaxation and family-friendly water fun. For guests seeking privacy and elevated comfort, Aquarabia features 91 luxury cabanas, positioning the destination as a fully integrated leisure offering that redefines water-based entertainment to the highest international standards.

Located in the Tuwaiq Mountains near Riyadh, Qiddiya City is an emerging destination bringing together entertainment, sports, and culture. Six Flags and Aquarabia Qiddiya City form part of its entertainment offering.

Business

Moody’s Establishes Regional HQ in Riyadh, Deepening Presence in Region

(FILES) Signage for Moody's Corporation is displayed at their headquarters at 7 World Trade Center on March 18, 2025 in New York City. (Photo by ANGELA WEISS / AFP)
(FILES) Signage for Moody's Corporation is displayed at their headquarters at 7 World Trade Center on March 18, 2025 in New York City. (Photo by ANGELA WEISS / AFP)
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Moody’s Establishes Regional HQ in Riyadh, Deepening Presence in Region

(FILES) Signage for Moody's Corporation is displayed at their headquarters at 7 World Trade Center on March 18, 2025 in New York City. (Photo by ANGELA WEISS / AFP)
(FILES) Signage for Moody's Corporation is displayed at their headquarters at 7 World Trade Center on March 18, 2025 in New York City. (Photo by ANGELA WEISS / AFP)

Moody’s Corporation announced that it has established its regional headquarters in Riyadh, reflecting ongoing commitment to support the development of the Kingdom’s capital markets and economy.

“This investment aligns to the Kingdom's Vision 2030 initiative and underscores its dynamism and growth,” Moody’s said in a statement this week.

The new regional headquarters marks an expansion of Moody’s presence in Saudi Arabia, where the company first opened an office in 2018, and reflects its longstanding commitment to the Middle East.

“The headquarters will strengthen Moody’s engagement with Saudi institutions and enable broader access to Moody’s decision grade data, analytics and insights,” said the statement.

“Our decision to establish a regional headquarters in Riyadh reflects our confidence in Saudi Arabia’s strong economic momentum, as well as our commitment to helping domestic and international investors unlock opportunities with our expertise and insights,” said President and Chief Executive Officer of Moody’s Rob Fauber.

“We are well positioned to provide the analytical capabilities and market intelligence that investors and institutions need to navigate evolving markets across the Middle East,” the statement quoted him as saying.

Mahmoud Totonji will lead the regional headquarters as General Manager.