RIYADH: 黑料社区鈥檚 banking sector extended its winning streak in April, posting SR7.77 billion ($2.07 billion) in pre-zakat and tax profits, a 16 percent increase compared to the same month last year.
According to the Saudi Central Bank, also known as SAMA, this brought year-to-date earnings to SR32.97 billion, an annual rise of 20 percent, keeping the Kingdom firmly on course for another record-breaking period.
The sustained momentum is attributed to a robust mix of state spending on giga-projects, resilient consumer demand, and still-elevated interest rates.
Financing volumes continue to climb, driven primarily by corporate borrowers across a growing range of industries, including manufacturing, utilities, insurance, and private education.聽
Speaking at the inaugural 24 Fintech conference in September, Finance Minister Mohammed Al-Jadaan said the Kingdom had licensed 224 fintech firms by the second quarter of 2024. File/SPA
Contractors are also racing to secure long-term credit for giga-projects such as NEOM, Diriyah, and the Jafurah gas field.
A wider Gulf picture
Strong as those local figures are, the broader region is also gaining momentum. A Kamco Invest report released in May showed that Gulf banks collectively earned a record $15.6 billion in the first quarter of 2025, an 8.6 percent increase from a year earlier.
Financial institutions in the UAE posted the largest absolute increase, adding $639.6 million, while Saudi lenders recorded the fastest annual growth at 17.2 percent.
Kamco added that fee income is rising, costs are under control, and loan-loss provisions fell sharply during the period, cushioning a small dip in net interest income.
Investor appetite is visible in market valuations. Forbes Middle East鈥檚 鈥30 Most Valuable Banks 2025鈥 March list includes 10 Saudi lenders with a combined market cap of about $269 billion鈥 roughly one-third of the entire ranking.
Al Rajhi Bank led the pack at $105.6 billion, with Saudi National Bank following at $54.7 billion.
Contractors are racing to secure long-term credit for giga-projects such as NEOM, Diriyah, and the Jafurah gas field. NEOM
Global Finance named Saudi Awwal Bank the Kingdom鈥檚 best lender in its May 鈥淲orld鈥檚 Best Banks in the Middle East 2025鈥 release, highlighting its HSBC-backed mobile app upgrades, Visa Direct payments, and one-stop small and medium-sized enterprises lending platform.
Cleaning the books and raising cash
Banks are also getting balance sheets ready for the next investment wave.
Bloomberg reported in March that lenders are exploring sales of older non-performing loans to specialist investors to free up capital for upcoming mega project drawdowns.
They鈥檙e also tapping capital markets. By June, they had issued over $5.6 billion in Additional Tier-1 bonds, already a full-year record and the world鈥檚 second-largest AT1 issuance in 2025, according to Bloomberg.
The spree includes Al Rajhi Bank鈥檚 $1.25 billion deal in April, Banque Saudi Fransi鈥檚 $650 million perpetual at 6.375 percent in May, Saudi Awwal Bank鈥檚 $650 million inaugural issue, and Alinma Bank鈥檚 $500 million of sustainable sukuk, all heavily oversubscribed.
Saudi National Bank was ranked in the Forbes Middle East鈥檚 鈥30 Most Valuable Banks 2025鈥 March list. Shutterstock
By tapping eager investors now, while margins remain healthy and global demand for Gulf paper is strong, lenders are bulking up capital buffers and keeping loan-to-deposit ratios in check. That leaves them better prepared to fund the fast-rising credit needs of projects like NEOM and Diriyah without tripping liquidity alarms later in the year.
Fintech role
Fintech is reshaping Saudi banking from the ground up. The Saudi Central Bank鈥檚 Open Banking Framework 鈥 most recently updated in September to cover payment-initiation services 鈥 sets common technical rules that let lenders and start-ups plug their systems together safely and at speed.
Speaking at the inaugural 24 Fintech conference in September, Finance Minister Mohammed Al-Jadaan revealed that the Kingdom had licensed 224 fintech firms by the second quarter of 2024, up from fewer than 100 just three years earlier.
One of the newest players is Riyadh-based Stitch, which closed a $10 million seed round on May 28. The company offers a single set of application-programming interfaces that lets banks, fintechs and even non-financial brands bolt on real-time payments and open-banking functions far faster than older systems.
Early adopters already include Lulu Exchange and point-of-sale platform Foodics. The founders say the fresh cash will go toward doubling the engineering team and expanding the product suite.
黑料社区鈥檚 sustained momentum is attributed to a robust mix of state spending on giga-projects, resilient consumer demand, and still-elevated interest rates. File/AFP
Looking ahead
Riyad Capital鈥檚 first-quarter preview, released in April, expects another double-digit profit rise this year, about SR19 billion for the listed banks it tracks, as loan growth stays strong and rate cuts arrive slowly.
S&P Global, in its 黑料社区 Banking Sector Outlook 2025 report, says a 10 percent increase in lending should outweigh a 20- to 30-basis-point dip in margins, keeping sector returns on assets near 2.1 percent to 2.2 percent.
Funding is the main watchpoint. Moody鈥檚 shifted its system outlook to stable on Feb. 25, saying strong credit growth is tightening liquidity, but capital buffers remain solid.
For now, asset-quality risks remain low. S&P expects non-performing loans to edge up to just 1.7 percent by the end of 2025, while loan-loss provisions are projected to stay around 50 to 60 basis points. Banks鈥 total capital ratios, hovering near 19 percent, provide a solid buffer to absorb potential shocks from falling oil prices or rising private-sector leverage.
Saudi lenders are still the region鈥檚 earnings workhorse. Profits are rising, market values are high, and fresh money 鈥 from bond buyers to venture capitalists 鈥 is flowing in. If they can keep gathering deposits quickly enough to fund a fast-growing loan book, the Kingdom鈥檚 banks look set to stay ahead of their Gulf neighbors in both profit and ambition well into next year.
