Banking revenue growth in Saudi Arabia is set to outpace other countries in the region. The Boston Consulting Group said increased spending in the environmental transformation is fueling profits.
The firm forecasts that Saudi Arabia’s retail banking revenues will grow at a Compound Annual Growth Rate of 11.4 percent between 2021 and 2026. It marks a rise of 8.7 percent from 2016 to 2021.
The growth is higher than Saudi Arabia’s fellow Gulf Cooperation Council countries: The UAE, Kuwait, Bahrain, and Qatar.
As a whole, the GCC nations are forecast to see an 8.8 percent Compound Annual Growth Rate within the same period to 2026.
Recovery in oil prices combined with increased interest rates is a key contributor to a post-pandemic revival, boosting economic growth and consumer spending.
The Boston Consulting Group also said increased spending on environmental, social, governance, and sustainability is the next frontier for competitive advantage in the sector.
“Saudi Arabia has deployed hugely ambitious projects under Vision 2030. Acting as facilitators, instigators and key actors of change for the nation will be retail banks,” said Martin Blechta, principal at the Boston Consulting Group.
“ESG in banking is very much a credit portfolio review and there is a significant first mover’s advantage – whereby, banks that start this activity ahead of competitors have more choice to prioritize the right clients.
“As they consider a redirected future, retail banks must adapt to changing consumer preferences and utilize digital tools and technology to craft solutions that will fulfill customers’ needs in new and sustainable ways while advancing the overall ESG agenda.”
Around the world, ESG — standing for environmental, sustainability, and governance — is becoming more and more important. ESG represents an organization’s corporate financial interests that focus mainly on sustainable and ethical impacts.