Saudi Arabia’s 10 largest listed banks reported a strong start to the year marked by improved profitability, cost discipline and accelerating corporate credit growth. According to Alvarez & Marsal’s KSA Banking Pulse for Q1 2025, lending momentum accelerated to 5.4 percent quarter-on-quarter (QoQ), driven by a 7.5 percent growth in corporate loans.
Meanwhile, deposits increased by 4 percent QoQ. That said, the aggregate loan-to-deposit ratio (LDR) rose to 106.1 percent, the highest in recent quarters.
Operating income rises as expenses decline
Operating income across Saudi banks increased by 3.2 percent QoQ, bolstered by a 9.6 percent surge in non-interest income, while operating expenses declined by 1.7 percent QoQ. This resulted in a 149-basis point improvement in the cost-to-income (C/I) ratio, which declined to 29.8 percent.
“Saudi banks are entering a new strategic phase marked by stronger capital stewardship and a focus on unlocking liquidity through innovation, from potential mortgage securitization to targeted portfolio rebalancing. This financial agility, combined with solid credit growth and cost control, positions the sector to actively support Vision 2030 priorities and channel capital toward infrastructure and giga-projects,” said Sam Gidoomal, managing director and head of Middle East Financial Services.
The country’s 10 largest listed banks in A&M’s KSA Banking Pulse are Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB) and Bank Aljazira (BJAZ).
Aggregate net income grows to SAR22.2 billion
Meanwhile, aggregate net income in Saudi banks rose by 6.3 percent QoQ to SAR22.2 billion, supported by a 15.8 percent decline in impairment charges. In addition, return on equity (RoE) improved by 44 basis points to 15.3 percent, while return on assets (RoA) edged up to 2.1 percent.
“The uptick in lending and deposit mobilization reflects improving business confidence and a rebalancing of liquidity across the sector. While margin pressures persist amid interest rate normalization, 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,” said Asad Ahmed, A&M managing director of financial services.
