Saudi banks recorded a combined net profit of SAR 80 billion ($21.3 billion) in 2024, reflecting a significant rise from SAR 70 billion ($18.7 billion) in 2023, according to Fitch Ratings. The sector’s return on equity improved to 15%, driven by strong lending activity and a lower cost of risk.
Lending Expansion and Interest Rate Impact
Net income for Saudi banks in Q4 2024 reached SAR 21.5 billion ($5.7 billion), up from SAR 20 billion ($5.3 billion) in Q3 2024. The rise was attributed to interest rate cuts, which boosted net interest margins (NIMs). The sector’s average NIM increased to 3.2% in Q4, up from 3.1% in the first nine months of 2024, as the cost of funding declined by 12 basis points (bp) to 3.2%.
Lending expanded by SAR 87 billion ($23.2 billion) in Q4, with Al Rajhi Bank leading the growth by adding SAR 44 billion ($11.7 billion) in financing across both retail and corporate segments. On an annual basis, Saudi banks’ gross financing grew by 14% in 2024, up from 11% in 2023.
Among the top-performing banks, Saudi Awwal Bank saw a 20% increase in gross financing, the Saudi Investment Bank posted a 22% growth, and Bank Aljazira expanded by 19%.
Deposits and External Liabilities
The customer deposits balance for Saudi banks declined by SAR 35 billion ($9.3 billion) in Q4, marking the first drop since 2019. However, deposits rebounded in January 2025, increasing by SAR 40 billion ($10.7 billion), as per data from the Saudi Central Bank.
Saudi National Bank (SNB) saw the largest outflow, with deposits decreasing by SAR 54 billion ($14.4 billion). Despite this, current and savings deposits still accounted for 72% of total deposits, and SNB offset the decline by securing repo facilities and increasing money market deposits.
At the end of Q4 2024, Saudi banks’ external liabilities remained stable at SAR 400 billion ($106 billion), representing 11% of total sector funding. Fitch Ratings expects Saudi banks to gradually increase their reliance on external funding, particularly for foreign-currency financing, while keeping net foreign assets below 2% in 2025.
2025 Outlook
Fitch forecasts that Saudi banks will maintain a higher growth rate than their Gulf counterparts, with sector financing expected to rise by 12% in 2025. Further interest rate reductions and improved liquidity conditions are likely to encourage continued expansion in the banking sector.
