Gross loans by listed Saudi banks grew 2.4% q-o-q to reach USD 850 bn in 3Q 2025, Kamco Invest said in its latest banking sector quarterly report (pdf). On a sectoral level, lending witnessed the biggest q-o-q growth in the finance and ins. sector (+10.3%) and utilities (+5.6%), while loans to real estate activity dropped 1.6%.

Total customer deposits declined for the first time in five quarters by 1% to reach USD 850.3 bn at the end of the quarter. The decline was mainly driven by a fall in demand deposits and deposits from financial institutions, which more than offset healthy growth in savings and other deposits.

The Saudi banking sector’s loan-to-deposit ratio reached a record high of 97.6% during the quarter, registering a growth of 330 bps compared to the previous quarter. The elevated ratio highlights challenges on the liquidity front in the banking sector and indicates higher external funding requirements in the near term.

Total revenues rose 2.1% for the quarter, supported by a 6.4% rise in non-interest income to USD 4.1 bn. Meanwhile, net interest income for Saudi-listed banks saw only a marginal improvement of 0.1% during the quarter, reaching some USD 8 bn.

The sector’s cost-to-income ratio improved, declining by 50 bps, reflecting strict cost control despite the revenue environment. Operating expenses saw the smallest increase in the GCC at 1.4%, while total impairments declined by 0.3% to USD 503.5 mn, resulting in the lowest cost of risk in the region at 0.26%.

Net interest margins for Saudi banks stood at 2.93%, showing a decline consistent with the broader region as interest rate cuts impacted repricing. Saudi-listed banks maintained a stable profitability profile, with the aggregate return on equity staying flat at 13%.

For the year ahead: Growth in 2026 is expected to be slightly better in the UAE and Saudi Arabia as they benefit from economic transformation efforts, leading to faster non-oil sector expansion.

The GCC at large

Listed banks across the GCC maintained a strong performance in 3Q 2025, with net income reaching USD 16.6 bn, according to the report. This was up 11.6% y-o-y and 2.2% q-o-q, and was fueled by a broad-based surge in revenues and a declining cost-to-income ratio that helped offset rising impairments.

Lending by listed GCC banks reached USD 2.41 tn, growing 3.6% q-o-q — the second-highest quarterly increase in over four years — and maintaining double-digit annual growth of 13.5% y-o-y.

Total customer deposits reached a new record of USD 2.8 tn, though q-o-q growth slowed to a three-quarter low of 2.1% as the overall regional increase was tempered by a decline in customer deposits at Saudi banks.

Meanwhile, aggregate net loan-to-deposit reached a record of 82.8% — well above the 80% mark — climbing more than 100 bps both sequentially and annually to reflect improved asset utilization and better margins, while Saudi banks pushed the country-level ratio to a record high of 97.6%.

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