Saudi based investment bank Al Rajhi Capital believes that Saudi Arabia’s banking sector offers strong buying opportunities amid the current sell-off in Tadawul where the bank index is down 10% since the end of September 2022.
Following the government budget statement, which has strong GDP forecasts for the medium term, the brokerage in a new report raised loan growth estimates, driven by corporate loans.
It raised total loan growth estimates for 2022 and 2023 to 14% and 12%, respectively, from 13% and 11% earlier. It also revised the loan growth estimates for 2024e and 2025e to over 11% in 2024e and almost 11% in 2025e (from 9% and 7%, respectively).
Al Rajhi raised corporate loan growth estimate to 13% each in 2022e and 2023e from 10% before, while raising the estimate for 2024-2026e to 14%/14%/10% from average 7.0% growth in each year before.
According to the report, the SME segment has been the key driver for corporate loan segment in the recent years supported by various governmental measures.