Saudi Construction Sector a Risk for Banks -Moody’s

Tuesday, 18th October 2016

The current weakness of Saudi Arabia’s construction sector poses a risk to Saudi banks with exposure to the sector, according to a statement by Moody’s on the publication of a research note on Tuesday.

Saudi’s construction sector has been strained by tough economic conditions and the Saudi government’s aim to reduce its fiscal deficit in light of depressed oil prices.

Some of the biggest players on the market, including Saudi Binladin Group and Saudi Oger, are crippled by slow government payments, leaving the construction giants to struggle to pay their workers.

Saudi banks’ exposure to the building sector increased by 19.7% year-on-year, more than double than the total bank credit increase. The main concern, however, is the percentage of non-performing loans in the sector, which has increased year-on-year to 3.1% after already being the highest of all sectors in the country.

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