28/04/2026 02:48 AST
Saudi Arabia's banking sector reinforced its role as a pillar of the national economy, posting a record start to 2026 with unprecedented first-quarter profits.
The Kingdom's 10 listed banks posted combined net profit of $6.4 billion (SR23.95 billion) in the first quarter, up 7.6 percent from a year earlier, underscoring the sector's ability to convert momentum generated by Vision 2030 into sustained financial gains.
The performance was driven by strong results from major lenders including Saudi National Bank, Al Rajhi Bank, and Riyad Bank, as well as Saudi Awwal Bank, Banque Saudi Fransi, and Arab National Bank.
The other banks making up the cohort were Alinma Bank, Bank Albilad, the Saudi Investment Bank and Bank AlJazira.
Al Rajhi Bank led the sector, with profit rising 14.3 percent to SR6.75 billion. The bank attributed the increase to an 18.4 percent rise in net financing and investment income, stronger returns on financing and investment, a 14.4 percent increase in operating income, higher banking fees and foreign exchange income, and lower depreciation expenses.
The Saudi National Bank ranked second, reporting net profit of SR6.42 billion, up 6.66 percent. It said growth was driven by a 3.1 percent rise in financing and investment income to SR14.8 billion, supported by expansion in its lending portfolio, higher operating income and lower operating expenses, including reduced expected credit-loss provisions.
Riyad Bank held third place with profit of nearly SR2.61 billion, up 5.1 percent. The lender cited higher trading income and stronger special commission income, along with lower losses on non-trading investment sales. Lower impairment charges also helped trim operating expenses.
On a quarterly basis, the sector also set a new high, with first-quarter profit up 1.26 percent from the fourth quarter of 2025, when earnings reached $6.31 billion.
Structural drivers
Financial markets analyst and member of the Saudi Economic Association Sulaiman Al-Humaid Al-Khaldi told Asharq Al-Awsat the record performance was driven by four main factors: elevated interest rates supporting margins, growth in mortgage and corporate lending linked to mega-projects, improving asset quality and lower provisioning, and government spending tied to Vision 2030 that created new financing opportunities.
The results reflected the resilience of Saudi banking, led by the Al Rajhi and Saudi National Bank, he underlined.
"This performance confirms the strength of the Kingdom's banking model and its ability to benefit from a positive economic environment, with financing demand from individuals and companies remaining strong," Al-Khaldi stated.
The sector earned more than SR95 billion in 2025, up 16 percent from the previous year, and profits could top SR100 billion in 2026, according to the financial analyst.
He added that while possible interest-rate cuts could pressure margins, stronger financing demand and government capital spending should remain key growth drivers.
Economic momentum
Economic analyst and founder and CEO of G.WORLD Mohamed Hamdy Omar said the record profits reflected the banking sector's role as a major beneficiary of domestic economic growth.
He told Asharq Al-Awsat that the 7.6 percent rise in profit was driven not by temporary cyclical factors but by sustainable structural trends, notably continued credit growth linked to Vision 2030 projects such as Neom, alongside expanding mortgage and retail lending.
Banks had also benefited from stronger net interest margins, helped by faster asset repricing than liabilities in recent periods, Omar remarked.
Moreover, diversified revenue streams reduced reliance on interest income, particularly through fees from payments, asset management and digital services, while cost discipline and improving asset quality - reflected in lower defaults and reduced credit provisions - also supported profitability. Digital transformation was delivering measurable gains in operational efficiency, particularly at larger banks.
Omar expected the sector to maintain strong performance in 2026, supported by financing demand and government capital expenditure, although falling rates could gradually pressure profit margins.
Improving conditions in the non-oil economy should also support asset quality, leaving the sector in a position of strength even as growth shifts to a more sustainable pace.
Arab News
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