Moody's remains upbeat on Saudi Arabia's banking sector, insisting the industry is profitable and well capitalized. Speaking to Arabian Business on Wednesday, Constantinos Kypreos, an analyst from corporate finance firm Moody's, said the industry was in better shape than most banking sectors around the globe. “The government has prudently invested its oil revenue windfalls in the past few years, so it has strengthened its financials and is in a position to have this expansionary budget, which will help the economy and banking sector,” he said. “The (banking) regulator has been prudent in requiring the banks to have a good asset quality and liquidity.” Kypreos said “I think the Saudi banks are liquid and they can finance projects but they are selective, so I don't think it's an issue of being unable to fund projects,” he said. “Having said that, risk appetite among some of the foreign banks that used to finance these projects has gone away, and this has put more strain on the local banking sector to fill in that gap.” While relatively positive about the industry's health, Kypreos admitted Saudi banks were not immune to the global downturn. “These are much more challenging times, so Saudi banks will be affected,” he said. “It's going to be much more challenging like everywhere else in the world, but Saudi banking is in a relatively better position than many other banking systems. “2008 was an exceptionally good year, with oil prices hitting almost $150, but I don't know when it will come back to that level. I expect banking sector as a whole to remain profitable and adequately capitalized, and show asset quality.”
