Fitch: Financial Metrics of Islamic Banks in Saudi Arabia Remain Stable Following Deterioration in 2019

According to a newly released report by Fitch Ratings (Fitch), Islamic banks in Saudi Arabia remain well positioned in the banking industry, despite slight weakening of financial metrics in 2019. The Islamic banks were supported by larger retail franchises, which required a lower cost of funding, with better asset quality.

According to Fitch, Islamic banks enjoyed higher profitability metrics than conventional banks in 2019 as a result of higher margins, attributed to greater retail financing and lower costs of funding. Islamic banks in Saudi Arabia account for 79% of the financing of the overall banking sector, the largest share amongst countries that enable conventional banks to function alongside Islamic banks.