عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Fitch Upgrades Saudi Banks’ Rating

In its report, Fitch noted that banks in Saudi Arabia are receiving adequate support from the authorities. (Photo: SPA)
In its report, Fitch noted that banks in Saudi Arabia are receiving adequate support from the authorities. (Photo: SPA)
TT
TT

Fitch Upgrades Saudi Banks’ Rating

In its report, Fitch noted that banks in Saudi Arabia are receiving adequate support from the authorities. (Photo: SPA)
In its report, Fitch noted that banks in Saudi Arabia are receiving adequate support from the authorities. (Photo: SPA)

US credit rating agency Fitch has upgraded eight Saudi banks’ long-term issuer default ratings to “A-” from “BBB+,” with a stable outlook, according to a press statement.

In this regard, experts told Asharq Al-Awsat that the current account surplus of the Saudi economy over the last period, which exceeded $1 trillion in gross domestic product, in addition to foreign reserves, which remain stable at $459 billion, reflected positively on local banks and contributed to economic strength and financial stability.

According to the experts, Saudi banks have proven their resilience thanks to the strength of the Saudi economy, at a time when major international banks have recently declared bankruptcy, including the American Silicon Valley and the Swiss Credit Suisse.

Fitch upgraded the rating of eight Saudi banks. Those include Riyad Bank, Saudi Awwal Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, The Saudi Investment Bank, Bank Aljazira and Gulf International Bank - Saudi Arabia.

The press statement noted that the rating agency also upgraded the Gulf International Bank and Gulf International Bank UK’s international depository receipts to “A-” from “BBB+.”

In its report, Fitch noted that banks in Saudi Arabia are receiving adequate support from the authorities, affirming their financial stability.
“The authorities have a strong ability to provide support to the banking system given their large external reserves and increased access to external markets,” the agency said.

In comments to Asharq Al-Awsat, Fadel Al-Buainain, member of the Saudi Shura Council, said that the Fitch rating upgrade for eight local banks reflected the Kingdom’s strong and sustainable economy.

According to Al-Buainain, the current account surplus of the Saudi economy, which exceeded one trillion dollars, managed to revive all local economic sectors, including the private sector, specifically financial institutions.

For his part, Economic Analyst Ahmed Al-Shehri told Asharq Al-Awsat that the rating upgrade is attributed to the current account surplus of the Saudi economy during the last period, which exceeded $1 trillion in gross domestic product, and to the foreign reserves, which are still stable at $459 billion.

He stressed that the current account surplus and foreign reserves contributed to economic strength and financial stability, pointing at the same time to other supporting factors, such as improved private sector growth and high government expenditure on the local economy.

At the beginning of April, Fitch had upgraded Saudi Arabia’s IDR to “A+” from “A.” The increase was attributed to Saudi Arabia’s strong financial position, favorable debt-to-gross domestic product ratio and secure sovereign net foreign assets.

The rating agency also highlighted that the improved rating is conditional on Saudi Arabia’s continuous commitment to steady progress with fiscal, economic and governance reforms.

Most Viewed

 
 
Business

US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
TT
TT

US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)

The American economy expanded at a healthy 3% annual pace from April through June, boosted by strong consumer spending and business investment, the government said Thursday, leaving its previous estimate unchanged.
The Commerce Department reported that the nation's gross domestic product — the nation's total output of goods and services — picked up sharply in the second quarter from the tepid 1.6% annual rate in the first three months of the year, The Associated Press reported.
Consumer spending, the primary driver of the economy, grew last quarter at a 2.8% pace, down slightly from the 2.9% rate the government had previously estimated. Business investment was also solid: It increased at a vigorous 8.3% annual pace last quarter, led by a 9.8% rise in investment in equipment.
The final GDP estimate for the April-June quarter included figures showing that inflation continues to ease, to just above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge — the personal consumption expenditures index, or PCE — rose at a 2.5% annual rate last quarter, down from 3% in the first quarter of the year. Excluding volatile food and energy prices, so-called core PCE inflation grew at a 2.8% pace, down from 3.7% from January through March.
The US economy, the world's biggest, displayed remarkable resilience in the face of the 11 interest rate hikes the Fed carried out in 2022 and 2023 to fight the worst bout of inflation in four decades. Since peaking at 9.1% in mid-2022, annual inflation as measured by the consumer price index has tumbled to 2.5%.
Despite the surge in borrowing rates, the economy kept growing and employers kept hiring. Still, the job market has shown signs of weakness in recent months. From June through August, America's employers added an average of just 116,000 jobs a month, the lowest three-month average since mid-2020, when the COVID pandemic had paralyzed the economy. The unemployment rate has ticked up from a half-century low 3.4% last year to 4.2%, still relatively low.
Last week, responding to the steady drop in inflation and growing evidence of a more sluggish job market, the Fed cut its benchmark interest rate by an unusually large half-point. The rate cut, the Fed’s first in more than four years, reflected its new focus on shoring up the job market now that inflation has largely been tamed.
Some other barometers of the economy still look healthy. Americans last month increased their spending at retailers, for example, suggesting that consumers are still able and willing to spend more despite the cumulative impact of three years of excess inflation and high borrowing rates. The nation’s industrial production rebounded. The pace of single-family-home construction rose sharply from the pace a year earlier.
And this month, consumer sentiment rose for a third straight month, according to preliminary figures from the University of Michigan. The brighter outlook was driven by “more favorable prices as perceived by consumers” for cars, appliances, furniture and other long-lasting goods.
A category within GDP that measures the economy’s underlying strength rose at a healthy 2.7% annual rate, though that was down from 2.9% in the first quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Though the Fed now believes inflation is largely defeated, many Americans remain upset with still-high prices for groceries, gas, rent and other necessities. Former President Donald Trump blames the Biden-Harris administration for sparking an inflationary surge. Vice President Kamala Harris, in turn, has charged that Trump’s promise to slap tariffs on all imports would raise prices for consumers even further.
On Thursday, the Commerce Department also issued revisions to previous GDP estimates. From 2018 through 2023, growth was mostly higher — an average annual rate of 2.3%, up from a previously reported 2.1% — largely because of upward revisions to consumer spending. The revisions showed that GDP grew 2.9% last year, up from the 2.5% previously reported.
Thursday’s report was the government’s third and final estimate of GDP growth for the April-June quarter. It will release its initial estimate of July-September GDP growth on Oct. 30.