MENA Banks: MENA Banks: Modest Saudi Cuts, Deeper UAE Earnings Downgrades

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MENA Banks: MENA Banks: Modest Saudi Cuts, Deeper UAE Earnings Downgrades

UpdateMSaudi's loan growth drivers are evolving & not necessarily waning: The driver of Saudi

loan growth has shifted from retail to corporate. Retail has slowed down mainly due to

high rates and elevated property prices. Both headwinds are cyclical and should fade from

next year. On the corporate side, even if certain giga projects ambitions are moderated,

the broader credit cycle may remain structurally supportive. Some high-profile projects,

including elements of Trojena and The Line, appear to have seen slower execution

timelines amid a more disciplined capital allocation approach. However, the regional

conflict has simultaneously increased the strategic importance of Saudi Arabia's logistics

and transport infrastructure.

Exhibit 28: Saudi Loan growth (YoY) has moderated as banks Exhibit 29: Drivers of growth have shifted from retail to

become selective and disciplined corporate

16% 120% Retail Real Estate

14% 100% Transport and logistics Accomodation & food services

12%

80% Other corporate

10%

8% 60%

6% 40%

4%

20%

2%

0% 0%

2022 2023 2024 2025 1Q26 -20% 2022 2023 2024 2025 1Q26

Source: Saudi Central Bank Source: Saudi Central Bank

Logistics has the potential to emerge as a new CAPEX theme: The Red Sea corridor is

emerging as an increasingly important trade and energy route as regional supply chains

get disrupted by the closure of the Strait of Hormuz. NEOM's geographic position

potentially strengthens its role as a gateway linking Europe and Egypt through the Red

Sea into Iraq and into the wider GCC. In our view, this could shift part of Saudi

infrastructure spending toward ports, warehousing, transport and associated industrial

development.