The aggregate net income of the Kingdom’s top 10 listed banks grew by 6.3% q-o-q in 1Q 2025 to SAR 22.2 bn, compared to a 1.9% increase in 4Q 2024, supported by higher fee income and cost efficiency, global consulting firm Alvarez & Marsal’s (A&M) said in its Saudi Arabia Banking Pulse 1Q report (pdf). Net loans and advances for Saudi banks grew by 5.4% q-o-q in 1Q, supported by an increase in corporate loans and deposits.

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Meet the banks: The report analyzed Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi Awwal Bank (SAB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB), and Bank Aljazira (BJAZ).

Corporate loans increased by 7.5% q-o-q in 1Q 2025, compared to 3.4% in 4Q 2024, accounting for 57.4% of the total gross loans, the report noted. Aggregate customer deposits rose 4.0% q-o-q in 1Q 2025, compared to a 1.3% drop q-o-q in 4Q 2024, driven by a rise in time deposits of 8%, accounting for 39.0% of total deposits.

Saudi banks’ LDR hit 106.1%: Surveyed banks’ loan-to-deposit ratio (LDR) increased to 106.1%, reflecting “faster credit expansion relative to funding growth — the highest LDR level in recent quarters,” according to the report. Cost-to-income ratio strengthened to 29.8%, down 149 bps q-o-q, as banks tightened expenses and boosted operating efficiency.

Operating income of the banks rose 3.2% q-o-q, compared to 1.1% q-o-q in 4Q 2024, on the back of a 9.6% increase in non-interest income, driven primarily by trade finance, foreign exchange, and investment gains. Among the top banks, SNB and SAB led the growth in fee and commission income, the report read. This led to the cost-to-income ratio improving by 149 bps to 29.8%, as banks curbed expenses and enhanced operating efficiency, with seven out of ten banks reporting an improvement in C/I ratio.

Also worth noting: Eight out of 10 banks reported a decline in net interest margin (NIM), with RIBL and ANB reporting the highest decrease of 25 bps q-o-q — RIBL coming in at 2.9% and ANB at 3.2%. Meanwhile, the central bank kept its repurchase agreement (repo) rate steady at 5.0% in 1Q 2025.

The picture remains positive for the banking sector: “Despite recent fluctuations in the Tadawul… and amid falling oil prices, global risk-off sentiment, geopolitical tensions, global trade uncertainties (e.g. US-China tariffs, Red Sea disruptions) and softer earnings in select non-bank sectors, the Saudi banking sector remains resilient, supported by strong fundamentals and ongoing economic reforms,” the report reads.

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