MOSCOW: Rated banks in Saudi Arabia should maintain stable financial risk profiles in 2020, barring any unexpected increase in geopolitical risk or a major fall in oil prices, S&P Global Ratings said today in the "Saudi Banking Sector 2020 Outlook: Risks Contained Despite Higher Credit Growth" report published on RatingsDirect. "We do not envisage these scenarios in our base case, however, we cannot exclude event risk--as demonstrated by the recent attack on Saudi oil infrastructure," said S&P Global Ratings credit analyst Roman Rybalkin. We believe the Saudi economy will recover from the 2019 recession, linked to the attack, next year. In our view, government spending should somewhat revitalize corporate lending, although mortgages are still likely to lead credit growth, which will stay at about 5%. Cost of risk should also stabilize at about 75 basis points on the back of buffers created thanks to International Financial Reporting Standards 9. "In addition, we expect Saudi banks' profitability to decline slightly as global monetary policy softens and rates decline," Mr. Rybalkin concluded.

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