Saudi Arabia’s banking sector saw an 18% y-o-y increase in net income in 2Q 2025, reaching SAR 23 bn and exceeding consensus estimates by 3%, a recent report (pdf) from Al Rajhi Capital showed. The strong performance was primarily led by key banks, notably Al Rajhi Bank and Saudi National Bank (SNB).

Outcomes exceed other forecasts: CI Capital expected in July that Saudi banks would see 14% y-o-y growth in aggregate net income in the second quarter this year.

Inside the quarterly data: Retail banks such as Al Rajhi Bank, SNB, and Bank Albilad posted earnings that beat estimates by 4%, while corporate banks like Bank Al Jazira and Banque Saudi Fransi (BSF) exceeded forecasts by 3%.

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Loan growth in the Kingdom’s banking sector rose 16% y-o-y during the quarter, outpacing the 6.9% y-o-y increase in deposits. This expansion propelled the loan-to-deposit ratio (LDR) to 106%, with Riyad Bank, Saudi Awwal Bank, Alinma Bank, and Al Rajhi at the forefront of the lending spike.

Also on a positive note, non-interest income jumped 26% y-o-y during the second quarter, mainly driven by higher fees, commissions, trading, and FX gains. However, net interest margins (NIMs) declined from the previous quarter, pressured by tighter liquidity conditions

and elevating competition in the corporate space.

Mixed outlook: Most banks — six out of nine that held earnings calls — have revised down their NIM outlook for 2025, citing “tighter liquidity conditions, lesser rate cuts than anticipated, and higher competition in the corporate lending space,” according to the report. On a positive note, most banks reiterated (except BSF) their loan growth forecasts and maintained their cost of risk guidance despite weaker oil prices. Other financial targets largely remained unchanged.

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

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