Reuters reported that the Saudi government's stimulus program is likely to result in strong economic growth and robust corporate credit demand, benefiting the country's banking sector.

Last month, Saudi Arabia announced plans to build schools, hospitals, housing and other infrastructure projects as part of 5 year plan budgeted at nearly USD 375 billion.

Goldman Sachs said that we believe Saudi banks are entering a virtuous banking cycle, underpinned by credit growth, asset mix improvement, low funding cost and falling loan losses. It started Samba Financial Group, Saudi British Bank, Banque Saudi Fransi and Arab National Bank with buy ratings.

It said that corporate loan growth would also rebound on the back of lower government financing. Banks with substantial liquidity should benefit the most. Relatively low consumer finance penetration and attractive demographics will result in robust retail loan growth for the banks.

(Sourced from Reuters)