By Mohammed Abu Meleeh
Riyadh-Mubasher: Though several Saudi companies are affected by falling oil prices, local banks are safeguarded by the decisions of Saudi Arabian Monetary Agency (SAMA) which tightened credit activities, analysts told Mubasher.
They added that the petrochemical companies which are hurt most by tumbling oil prices can normally repay their loans as they have strong financial solvency.
Some global banks raised concerns about oil companies’ loans, especially as oil prices reached historical levels.
Last week, oil prices reached their lowest levels in 12 years, losing 75% since mid-2014.
Mohamed Al-Mimouni, financial analyst, said the Saudi banks are protected by the central bank and the restrictions it imposes on lending activities, expecting the lenders not to be exposed to petrochemical companies’ loans.
He explained that most petrochemical producers will unlikely face a difficulty in repaying their loans as they sit on a pile of cash.
Mohammed Al-Ghalbi, financial analyst, said the Saudi banks are unlikely to face a state of exposure in the next period, thanks to their precautionary policies and strong liquidity.
Ahmed Al-Sharif, financial analyst, said despite the keenness of the Saudi government to rationalise the public spending and proceed with the government projects that maximise the returns for citizens, the ratings of global agencies should be taken into account.
“The agencies painted negative outlook for the Saudi banking sector over the next two years, expecting its profit growth to be impacted by the high cost of financing and increased risk despite the quality assets of banks,” Al-Sharif said .
He forecasted the sector to capitalise on the government loans raised to overcome the budget deficit. “We hope this to boost the sector in the next period amid falling oil prices.”
Translated by Abdul Maguid Aboshahla
