Saudi banks have absorbed economic crisis impact: Moody's

The Saudi banking sector has shown resilience and absorbed the impact of the economic crisis even as it stands exposed to challenges of possible deterioration in operating conditions and asset quality apart from a high concentration in lending and deposits, said rating agency Moody's Investors Service.

The sector will benefit from the Saudi Government's continued commitment to supporting the economy with an expansionary budget and numerous infrastructure projects, the agency said in a report. It said the Saudi Government had prudently invested its oil revenue windfalls of recent years and has historically been the main driver of economic activity.

"The impact of the financial crisis has been contained, as Saudi banks are not significantly dependent on market funding. Moreover, any losses from structured products and other risky investments have been comfortably absorbed," said Constantinos Kypreos, Vice-President in Moody's Financial Institutions Group based in Limassol.