It confirmed that Saudi banks enjoy strong capital
Al Rajhi Capital updated its forecasts for the current year, in light of the recent developments in the global markets and the crises that the banking sector is exposed to.
The company said that expectations regarding interest rates may change overnight in light of the current circumstances, noting that the volume of volatility in the bond markets is unprecedented, amid speculation that the yield on US bonds for two years will decline by more than 100 basis points within a few days.
Al-Rajhi Capital confirmed that global and US stocks are sticking to their gains since the beginning of this year, despite the uncertainty in the markets.
In another context, the company expected oil prices to maintain their levels despite the recent fluctuations, and believed that in the event of any recession, the risks of falling demand would be limited, with demand not being significantly affected by emerging markets.
Turning to the impact of the collapse of the Silicon Valley Bank on Saudi banks and stocks, Al-Rajhi Capital explained that the Kingdom’s banks differ in terms of structure from their American counterparts, noting that the balance sheet of the banking sector in the Kingdom still tends towards loans rather than fixed-return securities. Saudi banks enjoy strong capital and a high liquidity coverage ratio.
As for the Saudi market, Al Rajhi Capital expected that in the absence of a major global recession, the market index will witness some rise in the second half of this year. As for the deterioration of the global economic situation, the “TASI” index may witness a further decline, led by banking stocks.
