Samer Choucair: TASI’s Hold Above 11,000 Was Driven by Credit Quality, Not the Speed of Growth
Investment leader Samer Choucair said the Saudi Exchange’s benchmark Tadawul All Share Index, or TASI, closed the Sunday, September 6, 2026 session at 11,068.65 points, gaining 35.74 points, or 0.32%, with the market finding greater support in leading banking stocks than in any broad-based return of speculative momentum. Official Saudi Exchange data also showed 148 advancing stocks against 101 decliners during the session.
Choucair said trading value reached approximately SAR 2.96 billion on turnover of 160.8 million shares, while Al Rajhi Bank and Saudi National Bank led the gains, rising by roughly 0.7% and 1.1%, respectively.
The index had traded during the week within an approximate range of 11,012 to 11,100 points, declining around 1.5% on a weekly basis while remaining approximately 2.8% higher over the preceding 30 sessions. Its 12-month range extended from about 10,194 to 11,782 points, while the market capitalization of the Main Market stood at roughly SAR 9.5 trillion.
The Market Was Repricing Balance-Sheet Quality
Samer Choucair said: “TASI’s ability to remain above 11,000 points was not evidence of a return to speculative momentum. It reflected a reallocation of capital toward balance sheets with stronger credit quality.”
Market breadth remained relatively constructive, with about 148 stocks advancing compared with 101 declining, but Choucair said the influence of heavyweight names remained decisive because of the significant index weight carried by banks and Saudi Aramco.
Foreign investor ownership had also stabilized near 4.84% of total market capitalization by the end of August, keeping flows from emerging-market funds an important variable in the direction of Saudi equities.
For Choucair, the message from the session was not that investors had suddenly become more aggressive. Instead, capital was becoming increasingly selective.
In a market where financial institutions command substantial index weight, investors were rewarding the ability to preserve profitability, manage funding costs, and maintain asset quality rather than simply chasing the fastest balance-sheet expansion.
The Credit Cycle Has Entered a Calmer Phase
Samer Choucair said Saudi banking-sector earnings had grown by approximately 7.6% year on year in the first quarter to SAR 23.9 billion, supported by interest income and lower provisions, while annual loan growth moderated to around 7.7%.
Al Rajhi Bank had reported first-half net profit of approximately SAR 13.8 billion, representing growth of around 14%, while Saudi National Bank continued to maintain strong profitability.
At the sector level, non-performing loans stood at roughly 0.9%, with coverage exceeding 160%. Return on equity remained close to 14.7%, while net interest margins were broadly within a range of 2.8% to 3%.
According to Choucair, those figures are becoming more important than headline loan growth.
“The investor is no longer buying the credit-growth story at any price,” Choucair said. “The investor is buying a bank’s ability to protect its margin and manage its cost of funds.”
That distinction matters because slower credit expansion does not necessarily imply weaker shareholder returns.
If loan books continue to grow while asset quality remains resilient, provisions stay contained, and margins are protected, banks can generate higher-quality earnings even as the overall pace of credit creation moderates.
Regulation and Liquidity Are Forcing Greater Selectivity
Choucair said the Saudi Central Bank’s introduction of a 100-basis-point countercyclical capital buffer from May 2026 strengthened capital requirements and helped discourage excessive expansion, while credit growth for the year was expected to remain close to 8%.
He said this environment favors banks with stronger and more stable funding franchises.
Al Rajhi, where retail lending accounts for more than 60% of the financing portfolio, benefits from a relatively defensive funding profile. By contrast, banks that depend more heavily on wholesale funding can become more sensitive to slower government spending, project delays, and changes in liquidity conditions.
“When the market remains above 11,000 points with turnover below SAR 3 billion and banks providing the leadership, that is not enthusiasm,” Samer Choucair said. “It is discipline in balance-sheet selection.”
This distinction is critical for institutional investors.
Low turnover combined with index resilience can indicate that the market is not experiencing a broad risk-on rally. Instead, investors may be concentrating capital in a narrower group of liquid, profitable companies capable of preserving returns in a more demanding funding environment.
Risks and Opportunities
Choucair cautioned that the principal risks facing Saudi banks were not necessarily rooted in deterioration in credit quality.
Instead, the more immediate variables included global Treasury yields, index concentration, subdued market liquidity, and the possibility that a slowdown in certain spending programs could affect wholesale financing activity and banking-fee income.
At the same time, the availability of relatively attractive fixed-income alternatives was raising the hurdle rate for equities.
A one-year government savings sukuk yield of 4.80% in the September issuance meant that investors had less incentive to accept equity volatility without sufficient compensation.
That dynamic increases the importance of return on equity, earnings visibility, dividend capacity, and balance-sheet resilience when comparing listed banks with lower-risk fixed-income assets.
Banks generating strong risk-adjusted returns on equity can still compete effectively for capital. But institutions with weaker profitability or greater sensitivity to funding costs face a more difficult valuation environment.
Choucair also said index concentration remains an important consideration. Because banks and other heavyweight companies have such a significant effect on TASI, the headline index can remain relatively resilient even when participation across the wider market is uneven.
For investors, that means index stability should not automatically be interpreted as evidence of uniformly improving fundamentals across Saudi equities.
From Rewarding Speed to Rewarding Resilience
Samer Choucair said the Saudi banking sector in 2026 should increasingly be viewed as “an instrument of income and quality rather than a high-growth bet.”
This represents an important change in how institutional capital is approaching Saudi financial stocks.
During more aggressive stages of the credit cycle, investors may reward the institutions producing the fastest loan growth, expanding their balance sheets most rapidly, or gaining market share.
As the cycle matures, however, the emphasis shifts.
Funding discipline becomes more valuable. Credit quality matters more. Margin protection becomes more important. Provisioning discipline becomes a competitive advantage. And the ability to convert slower asset growth into sustainable shareholder returns becomes a more important valuation driver.
Choucair said capital inside TASI was effectively “moving from rewarding speed to rewarding resilience.”
That shift could become one of the most important factors determining the direction of the Saudi market through the remainder of 2026.
If banks can continue producing slower but higher-quality growth, maintaining strong asset quality while defending margins and returns on equity, they could provide an important foundation beneath the broader index even in the absence of strong speculative liquidity.
Samer Choucair concluded that TASI’s ability to remain above 11,000 points should therefore be understood less as a signal of renewed market euphoria and more as evidence of a change in capital-allocation discipline.
For institutional investors, the key question is no longer simply which bank can grow fastest.
It is which balance sheet can generate the highest-quality earnings while taking the least unnecessary risk.