RIYADH: Saudi Arabia’s banking sector boomed in 2022 on the back of potent revenue growth and is set for further gains, according to the Boston Consulting Group. Analysis by the US-based firm reported the Kingdom’s banking profits after taxes have grown an average of 7.9 percent per year since 2016 – although there are huge variations within that time frame due to global events such as the pandemic. In 2022, the sector recorded a 14 percent rise in profits compared to the previous 12 months. Its profitability was due to “the Kingdom’s ambitious Vision 2030 initiative and an economic boom experienced across the Gulf Cooperation Council countries,” noted the report. Recovery in oil prices combined with increased interest rates are key contributors to a post-pandemic revival, boosting economic growth and consumer spending, according to BCG. "The banking sector in Saudi Arabia is well-positioned for growth in the coming years. The Kingdom"s Vision 2030 initiative, along with high energy prices and an increase in tourism, are driving an economic boom in the GCC, and Saudi Arabia is at the forefront of this trend," according to Markus Massi, managing director and senior partner at BCG. As per Vision 2030, Saudi Arabia has planned and started executing numerous mega-projects, initiatives and reforms which expand the Kingdom and divert its economy away from oil. “These developments are being mirrored in the performance of the banking sector in Saudi Arabia, which is experiencing a period of much-welcomed profitability,” noted the report. The Kingdom is also set to be boosted by rising energy prices, with BGC citing forecasts that exporters in the Middle East and Central Asia will see a windfall of around $1.4 trillion more by 2027 than previously thought. “Much of this will flow to exporters in the GCC, which number among the top energy-exporting nations in the world,” added the report. BCG also argues that inflation has not been an issue in the region, despite the economic instability worldwide. "Inflation in Saudi Arabia has been controlled, thanks to high oil prices and less impact from current geo-political events. This, coupled with the Kingdom"s efforts to diversify its economy, bodes well for the future of the banking sector,” said Martin Blechta, principal at BCG. In addition, BCG’s report identified four opportunities for banks to consider to further strengthen their position in the Kingdom. Saudi banks should manage their funding effectively, revisit and re-balance their product strategies, invest for growth and leverage partnerships, noted the report.