Lower funding costs driving credit growth in Saudi banks

Great news for the Saudi Arabian economy! The Kingdom’s banking sector is currently experiencing a highly supportive environment that’s fueling significant credit expansion. This positive shift is largely due to a noticeable easing in key interest rate benchmarks, making it more affordable for banks to operate and, consequently, lend.

By November 2025, a clear easing cycle was evident across the financial landscape. We’ve seen a broad-based decline in crucial rates, including the repurchase and reverse repurchase agreement rates, as well as the Saudi Interbank Offered Rate (SAIBOR). These shifts are vital indicators of the cost of money within the banking system.

What does this mean in practical terms? Lower funding costs for banks! This easing has fundamentally reshaped funding conditions across the entire banking system. With less expensive access to capital, Saudi banks are now in an even stronger position to support economic activity through increased lending to businesses and individuals.

This development is a strong positive signal for economic growth and diversification within Saudi Arabia, as a healthy and robust credit market is essential for fostering investment and development across various sectors.

Source: Original Article