Saudi Banks Post Annual Profit Growth as Lending and Mortgage Activity Stay Strong

Saudi banks recorded higher profits in April despite a monthly decline, supported by continued credit expansion and improving liquidity conditions as the Kingdom presses ahead with its Vision 2030 economic transformation.

According to data released by the Saudi Central Bank, also known as SAMA, banks’ profits before zakat and tax reached SR8.24 billion ($2.18 billion) in April, marking a 6.1 percent increase compared with the same month last year. However, earnings fell 18 percent from March, leaving April profits at their lowest level in six months.

The banking sector remains a central pillar of Saudi Arabia’s diversification drive, with lenders financing large-scale projects linked to Vision 2030 while navigating tighter funding conditions caused by rapid loan growth.

Vijay Valecha, chief investment officer at Century Financial, said Saudi lenders remain comparatively resilient.

“Overall, Saudi banks are better positioned than many emerging market banking systems,” Valecha told Arab News.

Strong lending growth in recent years has exceeded deposit expansion, leading banks to seek additional funding through capital markets and overseas sources. Despite those pressures, liquidity indicators showed improvement in April.

The simple loan-to-deposit ratio declined by 116 basis points to 108.8 percent, standing well below its November peak of 113.2 percent. SAMA’s adjusted loan-to-deposit ratio also eased to 78.9 percent, reflecting improved banking liquidity.

SAMA’s own balance sheet contracted during the month, with total assets falling SR15.9 billion to SR1.95 trillion. The decline was mainly driven by lower deposits held with foreign banks and reduced miscellaneous assets, although investments in foreign securities increased.

Commercial banks, meanwhile, continued to expand. Their total assets rose by SR9.6 billion to SR5.08 trillion in April.

Deposit growth also strengthened. Saudi bank deposits increased by SR52 billion month on month to SR3.1 trillion. Time and savings deposits climbed sharply by SR75.3 billion to SR1.32 trillion, while demand deposits fell by SR37.3 billion to SR1.47 trillion.

Credit activity remained positive across both private and public sectors. Claims on the private sector increased by SR20.1 billion to SR3.23 trillion, while lending to the public sector rose SR8.8 billion to SR922.7 billion.

Banks’ foreign financial positions improved as foreign assets rose to SR431 billion from SR420.5 billion in March, while foreign liabilities dropped to SR661.5 billion from SR682.8 billion. As a result, net foreign liabilities narrowed significantly to SR230.5 billion.

Even with these gains, analysts remain cautious amid regional geopolitical uncertainty.

Fitch Ratings warned in April that prolonged tensions involving Iran could pressure Saudi banks’ profitability, liquidity and asset quality. The agency noted that banks’ loan-to-deposit ratio reached a record 108 percent at the end of 2025 and external liabilities climbed to around SR650 billion, highlighting increased reliance on foreign funding.

The housing market, however, provided encouraging signs. Analysis by Al Rajhi Capital showed new mortgage originations surged 51.1 percent in April to SR6.3 billion, the strongest performance in nine months.

Sandeep Puri, partner and head of finance for the Middle East at Addleshaw Goddard, said regulatory reforms linked to Vision 2030 are helping stimulate real estate investment.

“We have seen a number of positive regulatory developments in the past 12-18 months in the KSA real estate market,” Puri told Arab News, noting that growing interest from local and foreign investors is supporting mortgage demand.