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Saudi Banking Sector Posts Highest Quarterly Profits in Its History

05/08/2025 03:08 AST

Saudi Arabia's banking sector has achieved record-breaking quarterly earnings, reporting its highest-ever profits during the second quarter of 2025. According to financial disclosures, profits surged by 17.65% year-on-year, increasing by SAR 3.54 billion ($944 million) to reach SAR 22.98 billion ($6.13 billion), compared to SAR 19.54 billion ($5.21 billion) in the same period of 2024.

This exceptional performance was driven by all ten listed banks on the Saudi stock exchange, highlighting the continued strength and resilience of the Kingdom's financial sector. The banks include the Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank, SAB (Saudi Awwal Bank), Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad, Saudi Investment Bank, and Bank AlJazira.

Al Rajhi Bank led the sector in both net profit and growth, posting earnings of SAR 6.15 billion riyals, an impressive 30.9% increase compared to the same quarter last year. Close behind was Saudi National Bank, which reported profits just over SAR 6.14 billion, marking a growth rate of 17.3%. Riyad Bank came third with SAR 2.59 billion in profits, reflecting an 11.1% increase.

In its Article IV consultation report published in June, the International Monetary Fund affirmed the Saudi banking sector's resilience, citing its strong capitalization and profitability despite rising financing costs. Similarly, financial advisory firm Alvarez & Marsal noted the sector's robust credit growth, cost-efficiency, and financial flexibility.

Hamad Al-Olayan, CEO of investment firm Villa Capital, emphasized that the Saudi banking sector's performance merits deeper analysis.

He highlighted the sector's consistent growth over the past 15 years, driven by capital increases, expanded lending, and strategic expansion.

Al-Olayan also noted that the sector has become the most attractive in the Saudi financial market for both local and international investors, dominating equity fund holdings due to its stable returns and strong fundamentals.

The banking sector has played a key role in maintaining the stability of the Saudi stock market index, especially as other sectors such as petrochemicals and cement, have struggled and dragged down overall market sentiment, he added.

Without the performance of Al Rajhi Bank's stock, he said, the market index would likely be hovering between 9,300 and 9,500 points.

Looking ahead, Al-Olayan expects banks to lead the next phase of market growth, especially if interest rates begin to decline and economic clarity improves. He projected that the banking sector could drive the stock market index toward the 14,000-point mark.

He also stressed the sector's vital role in financing projects across all scales, noting that many banks have already increased their capital and lending activity in response to growing demand.

Al-Olayan predicted that both Al Rajhi and SNB may announce capital increases and generous dividends by the end of the year, further boosting investor confidence.