Saudi lenders are still keeping a cautious distance from the kingdom’s headline-grabbing giga projects, but that buffer is thinning as construction inches closer to real-world operations, according to Fitch Ratings.
For now, the numbers remain manageable. Bank exposure to Vision 2030’s flagship developments is relatively light, meaning delays or scale-backs are unlikely to trigger a spike in stressed loans across the system over the next couple of years. Fitch says the risk lies further down the road: prolonged execution hiccups or major redesigns could eventually show up in asset-quality metrics.
The five marquee projects—NEOM, Qiddiya, Red Sea Global, ROSHN and Diriyah—are still expected to collectively top the $1 trillion mark once fully built, even after recent recalibrations. Yet the flow of contracts tells a more measured story. Since 2019, only about $115 billion worth of work has actually been awarded.
Much of the heavy lifting has so far been handled by the Public Investment Fund, which Fitch estimates has covered roughly half of total funding needs through equity and debt. Bank borrowing, while rising, remains a secondary source.
A small slice of loan books—for now
Direct bank financing tied to giga projects accounts for just 5% to 7% of total sector loans as of end-2025. Even after factoring in guarantees and off-balance-sheet commitments, overall exposure is still below 10% of system-wide credit risk.
That balance is expected to shift as projects edge closer to revenue-generating phases. Fitch notes that lending supported by operating cash flows typically carries higher risk weights, which could start to pressure capital buffers. To manage that strain, banks may increasingly lean on tools such as mortgage-backed securities, significant risk transfers, or more conservative dividend policies.
Beyond the mega headlines
While giga projects dominate attention, Fitch points out that a broader pipeline of non-giga infrastructure under Vision 2030 continues to underpin corporate borrowing. Although new project awards dropped sharply last year, contracts handed out since 2022 still represent a substantial share of economic activity—offering banks plenty of lending opportunities.
Corporate loans have been the main engine of credit growth, expanding rapidly in recent years and accounting for the bulk of new lending. Growth is expected to cool slightly, but remain solid, as fewer projects move to the award stage.
Small and medium-sized enterprises are also taking a larger slice of bank lending, though they remain well short of national targets. Fitch expects SME credit to accelerate gradually, helped by more favourable capital treatment under Basel III rules.
Liquidity tightens, markets deepen
Saudi banks are operating in a tighter liquidity environment, with loan-to-deposit ratios climbing steadily. Even so, Fitch expects financing needs tied to Vision 2030 to keep loan growth elevated, pushing banks to diversify funding sources and further develop local and international debt markets.
Mortgage securitisation is likely to gain momentum as interest rates ease. A pickup in issuance—particularly through the Saudi Real Estate Refinance Company—could unlock fresh liquidity and ease capital pressures, given the size of banks’ mortgage portfolios.
In short, Saudi banks are no longer just spectators to the kingdom’s grand construction agenda. Their exposure is still contained—but the direction of travel is clear.
