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• Lending growth moderated to 11.8% YoY, while deposit growth remained stable at 8.8% YoY
• Net income increased by 16.3% YoY, supported by 11.3% YoY growth in operating income
• Profitability improved as RoE and RoA rose to 15.2% and 2.1%, respectively, although NIM declined to 2.86% amid monetary easing
• Asset quality strengthened, with NPL and CoR declining to 0.9% and 0.30%, respectively, and the coverage ratio improving to 162.4%

Kingdom of Saudi Arabia – 09^th April, 2026 – Leading global professional services firm Alvarez & Marsal (A&M) has released its latest edition of the Kingdom of Saudi Arabia (KSA) Banking Pulse, analyzing the FY 2025 performance of the kingdom’s ten largest listed banks. The year reflected resilience and rebalancing in the Saudi banking sector, with credit growth moderating from recent highlights while banks continued to deliver strong profitability, improved asset quality, and solid balance sheet strength, supported by a favorable macro-outlook and ongoing momentum under Vision 2030.

Lending growth moderated to 11.8% YoY but continued to outpace deposit growth of 8.8% YoY. Banks reported strong net income growth of 16.3% YoY, driven by 11.3% YoY growth in operating income. Net interest income of the banks grew by 8.5% YoY, while non-interest income grew by 21.1% YoY, reflecting ongoing revenue diversification. KSA banks continued to improve operating efficiency, with the C/I ratio declining to 29.0%, as operating income growth outpaced operating expense growth of 3.3% YoY.

The rate-cut environment pressured margins, with NIM declining to 2.86% as YoC fell to 6.8%, while CoF remained stable at 3.5%. However, profitability improved, with RoE and RoA rising to 15.2% and 2.1%, respectively. The increase in CCyB to 1% from May 2026 may weigh on RoE going forward.

Asset quality improved, with CoR declining to 0.30%, NPL ratio reducing to 0.9%, and coverage ratio increasing to 162.4%. Overall, trends remain constructive with no immediate pressure on credit costs.

The report analyzes the top ten KSA banks by asset size: Saudi National Bank (SNB), Alrajhi Bank (ALRAJHI), Riyad Bank (RIBL), Saudi Awwal Bank (SAB), Alinma Bank (ALINMA), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Bank Albilad (BALB), Saudi Investment Bank (SAIB), and Bank Aljazira (BJAZ).

Mr. Sam Gidoomal, Managing Director and Head of Middle East Financial Services, commented: “FY 2025 demonstrated resilience in the Saudi banking sector, with strong profitability, improving asset quality, and solid balance sheets despite slower credit growth. Looking ahead to FY 2026, rising geopolitical risks may create uncertainty; however, banks with disciplined balance sheet management, diversified revenues, and exposure to Vision 2030 projects are better positioned to sustain growth.”

Prevailing Trends Identified for FY 2025

• Credit growth moderated, while deposits grew steadily. Net L&A increased by 11.8% YoY, while deposits rose by 8.8% YoY, leading to a 2.8% YoY increase in LDR to 106.5%.
• Strong net income growth, supported by robust operating income growth. Net income grew 16.3% YoY, driven by operating income growth of 11.3% YoY which was supported by net interest income growth of 8.5% YoY and strong non-interest income growth of 21.1% YoY.
• Cost efficiency improved, led by cost optimization measures and strong revenue momentum. The C/I ratio continued its improvement trend, declining by 2.2% YoY to 29.0%.
• Monetary easing impacted NIM. Aggregate NIM declined to 2.86% from 2.95% in the previous year, as YoC fell to 6.8% while CoF remained stable at 3.5%.
• Strong income growth led to robust profitability ratios. RoE and RoA increased to 15.2% and 2.1%, respectively.
• Asset quality continued to improve. NPL declined by 18bps YoY to 0.9% and CoR reduced by 4bps YoY to 0.30%. The coverage ratio increased by 1.4% YoY to 162.4%.
• The banks’ valuation dynamic remained resilient. As of FY2025, Saudi banks trade at an average P/E of 10x and P/TBV of 1.5x, remaining attractive relative to regional and global peers.

Overview

Source: Financial statements, investor presentations, A&M analysis

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