Latest news with #SaudiBanks
Arabian Business
30-06-2025
- Business
- Arabian Business
Saudi Arabia banking sector shows strong start to 2025 with improved profitability
Saudi Arabian banks recorded a strong start to 2025, with aggregate net income rising 6.3 per cent quarter-on-quarter to SAR 22.2 billion ($5.92 billion) in the first quarter, according to a report released on Monday by professional services firm Alvarez & Marsal. The Kingdom's Banking Pulse, which analyses the performance of Saudi Arabia's 10 largest listed banks, highlighted improved profitability metrics, with return on equity (ROE) increasing by 44 basis points to 15.3 per cent and return on assets (RoA) edging up to 2.1 per cent. Saudi banking sector shows strong performance Corporate lending momentum accelerated, with net loans and advances rising 5.4 per cent quarter-on-quarter, driven by a 7.5 per cemt surge in corporate loans, which now represent over 57 per cent of total gross loans. 'Saudi banks are entering a new strategic phase marked by stronger capital stewardship and a focus on unlocking liquidity through innovation – from potential mortgage securitisation to targeted portfolio rebalancing,' said Sam Gidoomal, Managing Director and Head of Middle East Financial Services at Alvarez & Marsal. The report revealed that deposit growth rebounded to 4.0 per cent after declining in the previous quarter, led by an 8.1 per cent rise in time deposits. This led to the loan-to-deposit ratio increasing to 106.1 per cent, the highest level in recent quarters. Operating efficiency improved significantly, with the cost-to-income ratio declining by 149 basis points to 29.8 per cent, as banks controlled expenses while growing operating income by 3.2 per cent. Non-interest income surged by 9.6 per cent quarter-on-quarter, primarily driven by growth in trade finance, foreign exchange, and investment gains, offsetting pressure on interest margins following recent policy rate cuts. According to Asad Ahmed, A&M Managing Director, while margin pressures 'persist amid interest rate normalisation, the decline in impairments and growth in fee-based income indicate that banks are diversifying their revenue streams and adapting effectively to the evolving environment.' Asset quality improved marginally with the NPL ratio declining to 1.03 per cent, though coverage ratios fell to 154.8 per cent as banks reduced impairment allowances by 15.8 per cent. According to the report, the Kingdom's economy is expected to grow by 3.6 per cent year-on-year in 2025, with non-oil activities contributing significantly more at 4.3 per cent compared to 3 per cent from oil activities, reflecting ongoing progress in the Kingdom's economic diversification under Vision 2030. The banking sector analysis included Saudi National Bank, Al Rajhi Bank, Riyad Bank, Saudi British Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad, Saudi Investment Bank, and Bank Aljazira, which collectively represent the largest financial institutions in the Saudi market.
Zawya
23-06-2025
- Business
- Zawya
Qatar's banking credit facilities see 3% rise in Q1
Doha, Qatar: The banking credit facilities in Qatar bounced back and showed the biggest quarter-on-quarter (q-o-q) growth in nine quarters during the first quarter (Q1) of 2025 at 3%. The increase was led by a strong growth in lending to public sector at 7.9% followed by a similar increase in lending to contractors. Lending to general trade and real estate increased by 1.5% followed by 0.8% increase in lending to services according to Kamco Invest. Additionally, banks in Qatar registered the biggest increase in revenues with a q-o-q gain of 2.1% among the Gulf Cooperation Council (GCC) countries. After registering a healthy growth in revenues during the previous quarter, the sequential growth in total bank revenues for the GCC banking sector was flattish with a marginal growth of 0.04%, reaching $34.6bn during Q1-2025. The report noted that the Qatari banks witnessed growth in revenues with an increase of 2.1% followed by Saudi and UAE-listed banks with growth of 1.6% and 0.6%, respectively. The data from GCC central banks highlighted the resilience of regional economies with continued growth in outstanding credit facilities. Total credit facilities, as seen from central bank published data, continued to show growth during Q1-2025 led by growth in all countries in the region. The GCC banking sector bottom-line growth remained steady during Q1-2025 witnessing a q-o-q growth of 7.1% and a y-o-y growth of 8.6% to reach $15.6bn during the quarter, a new record high for the sector. The increase came despite a decline in net interest income during the quarter and was mainly led by higher non-interest income, lower operating expenses as well as a sharp seasonal decline in impairments during the quarter. The decline in net interest income reflected the impact of rate cuts during the second half of 2024 with aggregate yield on credit for the GCC banking sector falling by 5 bps to 4.16% in Q1-2025 as compared to 4.21% in Q4-2024. Meanwhile the aggregate lending by listed banks in the GCC continued to show q-o-q growth during Q1-2025, backed by growth in all GCC markets. The aggregate gross loans at the GCC level reached a new record high of $2.25 trillion, recording the highest q-o-q growth in 15 quarters at 3.6% in Q1-2025 versus 2.4% during the previous quarter. The year-on-year (y-o-y) growth continued to remain steady in double digits at 12.5%. Banks in Saudi Arabia reported the biggest q-o-q growth in gross loan in the GCC during Q1-2025 mainly led by healthy lending in almost all sectors. Gross loans growth for Saudi-listed banks came in at 5.5% or $41.9bn to reach $801.5bn during Q1-2025. UAE and Qatari banks were next with lending growth of $20.1bn (+3.2% q-o-q) and $14.4bn (+3.6% q-o-q), respectively, while banks in Oman and Bahrain registered marginal increase. In terms of type of banks, conventional banks in the GCC registered a relatively healthy growth in lending during the quarter with gross loan growth of 4.2% to reach $1.6 trillion while growth in Islamic bank lending came in at 2.4% to reach an outstanding gross loan of $677.9bn at the end of the quarter. © Dar Al Sharq Press, Printing and Distribution. All Rights Reserved. Provided by SyndiGate Media Inc. (
Asharq Al-Awsat
30-05-2025
- Business
- Asharq Al-Awsat
Saudi Banks Post Record-Breaking Profits in Q1 2025
Saudi banks achieved historic profits in the first quarter of 2025, recording their highest-ever quarterly earnings at $5.94 billion (SAR 22.26 billion). This marks a notable 19% increase compared to the same quarter in 2024, representing a gain of $965 million (SAR 3.62 billion). All ten listed banks on the Saudi stock exchange reported growth in net profits during the first quarter, reflecting robust performance across the industry. The National Commercial Bank (NCB) led the way with SAR 6.02 billion in net profit, up 19.48% from the first quarter of last year. Al Rajhi Bank ranked second with SAR 5.9 billion in profit, posting the highest growth rate among its peers at 34%. Riyad Bank came in third, with SAR 2.48 billion in net income, reflecting a 19.94% increase. Operating Income Drivers Dr. Suleiman Al-Humaid Al-Khalidi, a financial markets analyst and member of the Saudi Economic Association, attributed this record-breaking performance to several key factors: the expansion of lending portfolios, higher net commission and operating income, and a decline in loan loss provisions. He noted that the reduction in provisions -funds set aside to cover potential loan defaults- was a significant factor supporting profit growth. Additionally, banks benefited from returns on debt instruments and a notable expansion in mortgage financing, both of which contributed to the strong results. Al-Khalidi expects Saudi banks to maintain this strong momentum in the coming quarters, projecting that total annual profits could reach SAR 85–90 billion by year-end. Such figures, he said, would set new historical benchmarks and reflect the strength, resilience, and diversification of the Saudi economy. Interest Rates and Market Conditions Mohamed Hamdy Omar, economic analyst and CEO of GWorld, echoed this positive outlook, crediting the sector's performance to the continued robustness of Saudi banks. He cited persistently high global interest rates, contractionary monetary policies, and the Saudi riyal's peg to the US dollar as key drivers that boosted lending margins. He pointed out that growth in lending portfolios, especially in real estate and corporate loans, has been driven by Vision 2030 initiatives and major infrastructure projects, all of which significantly enhanced fee income and operational earnings. Looking ahead, Omar predicted continued strong performance for the banking sector in the remainder of 2025, supported by steady interest rates and strong demand for financing. However, he cautioned that any global move toward lowering interest rates could pressure profit margins, underscoring the importance of income diversification and enhanced digital services. He stressed the need for vigilance regarding geopolitical developments and oil prices, both of which influence liquidity and credit activity in the Saudi market. Omar concluded by highlighting the importance of investing in financial technology and digital transformation to boost competitiveness and attract new customer segments, while also encouraging banks to diversify their portfolios to hedge against future risks.
Arab News
22-05-2025
- Business
- Arab News
Savings deposits hit highest share in 16 years as Saudi money supply climbs to $815bn
RIYADH: Saudi banks' money supply rose 8.22 percent year on year to SR3.06 trillion ($815 billion) in March, driven by a sharp surge in time and savings deposits, recent data showed. According to figures by the Saudi Central Bank, also known as SAMA, this category increased by 27.55 percent during the period to reach SR1.07 trillion, the greatest growth rate in over 14 months. It now accounts for 35.2 percent of the total money supply, marking its highest share in 16 years. This notable shift reflects changing behavior among depositors, increasingly favoring interest-bearing accounts amid ongoing global monetary tightening. While the US Federal Reserve kept rates steady in recent months following 100 basis points of cuts last year, the risk of renewed inflation, partly due to rising import tariffs, may have delayed further easing. Given that SAMA typically mirrors Fed rate decisions to maintain the riyal's dollar peg, this has reinforced the appeal of yield-generating instruments like term deposits among Saudi savers. Term deposits, which offer higher returns than conventional bank accounts in exchange for holding funds over a fixed period, have become more attractive to Saudi savers seeking to lock in interest income amid volatile economic signals. Despite this surge, demand deposits, accounts that allow immediate access to funds, still hold the largest share at 47.84 percent, or SR1.46 trillion. However, this marks their lowest proportion in nearly five years. Growth in this category slowed to 3.9 percent year on year, reflecting a broader migration toward savings products. Meanwhile, quasi-money deposits, which include foreign currency deposits and marginally liquid instruments, declined by 22.85 percent to SR266.87 billion, representing 8.73 percent of the total. Currency outside banks rose by 10.57 percent to SR251.53 billion. Credit to businesses in the Kingdom has witnessed robust growth in recent quarters, underpinned by increased demand from key sectors such as real estate, construction, manufacturing, and broader non-oil economic activities. According to data from SAMA, corporate lending grew by over 22 percent year on year in March, reflecting the banking sector's critical role in financing Vision 2030-linked projects and supporting economic diversification. This strong lending momentum has contributed to a tightening liquidity environment. As loans continue to grow at a faster pace than deposits, reflected in the rising loan-to-money supply ratio, which climbed from 95 percent in March 2024 to 101.51 percent in March 2025, banks have increasingly turned to capital markets to maintain liquidity. In particular, Saudi banks have ramped up their sukuk issuances and other debt instruments to meet financing demand while preserving balance sheet stability. For example, several major financial institutions, including Al Rajhi Bank and Saudi National Bank, have recently raised multibillion-riyal sukuk to bolster their funding base. Saudi Arabia's expanding reliance on debt markets to fund its ambitious development agenda has been met with continued confidence from major credit rating agencies, reflecting the Kingdom's robust fiscal position and commitment to economic diversification. In 2024, the total value of listed sukuk and debt instruments in the Kingdom rose by more than 20 percent year-on-year, reaching SR663.5 billion, up from SR549.8 billion in 2023, according to data from the Capital Market Authority. This marks a significant acceleration in domestic debt issuance, underscoring the sector's growing dependence on capital markets to maintain liquidity amid sustained loan expansion. Moody's Investors Service upgraded Saudi Arabia's credit rating to 'Aa3' from 'A1' in November, citing the country's efforts to diversify beyond its oil economy. The agency noted that these diversification efforts would mitigate the Kingdom's vulnerability to oil market fluctuations and the global carbon transition over time. Similarly, S&P Global Ratings revised Saudi Arabia's outlook to positive in September, affirming its 'A/A-1' ratings. The agency highlighted the Kingdom's strong non-oil growth outlook and economic resilience, expecting an acceleration of investments to develop newer industries, such as tourism, and diversify the economy away from its primary reliance on the upstream hydrocarbon sector. These affirmations by major credit rating agencies underscore the nation's solid creditworthiness and the effectiveness of its economic reforms under Vision 2030, even as it increases borrowing to finance its transformative projects.
Arab News
19-05-2025
- Business
- Arab News
Saudi banks' March profits jump 27% on lending boom
RIYADH: Saudi banks recorded a 27.1 percent year-on-year increase in net profits in March, reaching SR8.81 billion ($2.35 billion). According to the Saudi Central Bank, also known as SAMA, this figure reflects earnings before zakat and tax. The robust performance marks one of the strongest monthly earnings in recent years. It underscores growing confidence in the Kingdom's banking sector amid steady economic activity and a strong pipeline of Vision 2030-related projects. According to a January report by S&P Global Ratings, Saudi banks are expected to maintain stable profitability throughout the year. The analysis highlighted a favorable economic environment and declining interest rates as key enablers of continued credit expansion. In particular, corporate lending is anticipated to remain the primary driver of loan growth in 2025, supported by increased construction activity, infrastructure investment, and government-led initiatives. S&P expects lending growth to hover around 10 percent for the year, with corporate lending closely tied to Vision 2030 implementation leading the surge. Meanwhile, mortgage lending is projected to recover moderately in response to lower borrowing costs. Saudi banks are also expected to continue leveraging international capital markets to fund growth. S&P estimated credit losses will stabilize at 50 to 60 basis points, supported by strong provisioning cushions built in recent quarters. The March performance aligns with broader credit dynamics observed in Saudi Arabia. According to SAMA, total bank credit reached SR3.1 trillion in March, an annual increase of 16.26 percent, the highest growth in over three years. Corporate loans accounted for 55.19 percent of the total, rising 22.3 percent year-on-year to over SR1.71 trillion. This trend reflects a shift in Saudi lending priorities, with businesses now driving the lending landscape. The uptick in business credit signals increased private sector activity, particularly across construction, real estate, and manufacturing. This robust banking performance aligns with the Kingdom's broader non-oil economic momentum. According to the Riyad Bank Saudi Arabia Purchasing Managers' Index compiled by S&P Global, the Kingdom recorded a PMI of 58.1 in March, the highest among its Middle Eastern peers and well above the 50.0 threshold, indicating expansion. Saudi Arabia's Ministry of Economy and Planning reported in February that non-oil activities now make up 52 percent of gross domestic product, having grown 20 percent since the launch of Vision 2030. With the government targeting $100 billion in annual foreign direct investment by 2030, the expansion of the banking and non-oil sectors plays a critical role in attracting global capital and supporting long-term economic sustainability. As corporate activity intensifies and lending strategies evolve, Saudi banks appear well-positioned to balance growth, profitability, and resilience.
