Saudi Arabia’s banking sector saw its 3Q net income increase 15.1% y-o-y and 2.8% q-o-q, reaching SAR 23.6 bn, according to a recent report (pdf) from Al Jazira Capital.

Inside the quarterly data: Six out of the 10 listed banks exceeded the consensus earnings forecasts, with SNB beating estimates by 12.5% and Riyad Bank by 6.1%. Meanwhile, Arab National Bank posted the largest shortfall, 1.5% below estimates, followed by Alinma, which fell short by 0.8%.

Net income growth is slowing down: The sector’s net interest margin (NIM) dropped 0.24% y-o-y in 3Q 2025 to stand at 2.88%. Net special commission income fell to 5.7% y-o-y during the quarter, down from 9.4% in 2Q and 11.1% 1Q. Liquidity shortage among banks drove a gap of about 1.36% between the SAR deposit rate and the SOFR interest rate for one-year deposits. The net fee income (NFI) to net interest income (NII) ratio grew by 3.74 percentage points to 34% in 3Q.

Loan growth in the Kingdom’s banking sector rose 14.4% y-o-y to SAR 2.9 tn during the quarter, outpacing a 7.8% y-o-y increase in deposits. This expansion propelled the loan-to-deposit ratio (LDR) to hit 106.8%, up by 4.75 percentage points y-o-y. Riyad Bank and Alrajhi were at the forefront of the lending spike, while BSF and SNB saw lower lending growth rates.

On the positive front: The non-performing loan ratio (NPL) went down by 20 bps y-o-y to 1.12% in 3Q 2025, with a healthy coverage level of 130.2%. Cost of risk (CoR) declined by 10 bps y-o-y to 24 bps during the quarter. Meanwhile, the cost-to-income ratio fell by 241 bps y-o-y to 28.6%, with operating income growing 8.8% y-o-y and operating expenses edging up 0.3% y-o-y.

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