Central banks publish ratios constantly; governors choose which ones to carry abroad. Speaking at the Istanbul Economic Forum on Thursday, the Governor of the Saudi Central Bank, Ayman Al-Sayari, chose one: about 87 percent of Saudi banks’ liabilities come from domestic sources. The number is the quiet architecture under most of what the Kingdom’s financial system has done this year, and the governor’s decision to foreground it, in Istanbul, three weeks before third-quarter results finish landing, reads as deliberate.
The rest of his account filled in the frame. Banks’ liquidity coverage ratio stands above 170 percent, roughly 1.7 times the regulatory floor, and the net stable funding ratio at 114.6 percent. Lenders have kept access to funding and borrowing markets through the year’s disruptions and have continued financing projects. The sector’s stability through regional tensions, in his telling, rests on that domestic funding base, alongside the Kingdom’s reserves, fiscal buffers and infrastructure investment.
What the 87 percent means in practice: the deposits and funding instruments that carry Saudi lending are owed to households, firms and institutions inside the Kingdom, not to foreign wholesale markets. Systems funded that way do not face the sudden-stop problem, where external creditors reprice a country faster than its banks can adjust. In a year when regional risk has been repriced repeatedly, Saudi banks’ cost of funds has been set mainly by domestic conditions: the rate cycle SAMA imports through the peg, and the competition for riyal deposits that has defined bank margins all year.
The published data trace the same outline. Bank credit grew 7 percent in the year through August to SR3.57 trillion while time and savings deposits passed SR1.4 trillion, a balance sheet expanding on domestic funding even as deposit costs rose. External issuance has continued, roughly SR31 billion of bank sukuk expected this year, with Al Rajhi and Arab National Bank both printing dollar instruments since August. Read against the 87 percent, those deals look like what they are: diversification at the margin and capital management, not a funding dependence.
The governor’s remarks on the wider economy drew the same distinction between shock and system. The economy has contracted for two consecutive quarters, he noted, an oil-sector story, while non-oil activity by his account is growing at a rate approaching 3 percent with Saudi unemployment at record lows. Inflation has stayed moderate, which he credited to rent-related measures, the exchange-rate policy and the infrastructure investment that has eased supply bottlenecks. The East-West pipeline’s restored capacity, near 5.8 million barrels per day, appeared in his telling as a financial-stability fact: export continuity is what keeps fiscal buffers and bank liquidity connected.
The timing gives the speech its function. Third-quarter bank results arrive through this month, and the season’s standing questions are funding cost and margin. Rating agencies have spent the autumn examining exactly this ground, loan-to-deposit arithmetic and the price of deposit competition. Al-Sayari’s numbers are the system-level answer, delivered before the bank-by-bank ones: the funding base is domestic, the liquidity metrics sit well above floors, and the external market is a choice rather than a need.
The next reading arrives on two tracks: quarterly disclosures from the listed banks through October, and SAMA’s September bulletin in early November, which will show whether deposit growth kept pace with a quarter of heavy issuance and whether the margin pressure the agencies flagged is visible in the system’s own accounts.