Banks in Saudi Arabia are expected to increase their lending activities in 2014, continuing the growth seen in 2013, according to rating agency Fitch.

Saudi banks expanded their loan portfolios by 12.4 per cent in the first nine months of 2013, the agency’s latest report says.

Saudi Arabia’s economy will offer the banking sector an increasing number of opportunities to further expand its loan book, with the government investing heavily in infrastructure.

The Gulf country’s banking sector is well-capitalised with an average Fitch Core Capital ratio of 15 per cent at the end of the first nine months of 2013.

The banks enjoy among the lowest loan/deposit ratios in the region. They also benefit from large volumes of liquid assets such as government securities and deposits with the Saudi Arabian Monetary Agency.

Fitch is maintaining a positive outlook on the sector and a stable outlook for all rated banks.