Data compiled by Alrajhi Capital reveals that Saudi-listed banks experienced an 8% year-on-year (YoY) increase in net profit for the first quarter of 2026, reaching 24 billion Saudi riyals ($6.4 billion) and outpacing market consensus estimates by 3%. This bottom-line expansion was primarily anchored by robust performances from Al Rajhi Bank, Saudi National Bank (SNB), and Bank Albilad, showing resilience even after the outbreak of the Iran war on February 28. Financial growth was heavily supported by an 8% YoY rise in funded income alongside a substantial 38% reduction in provisions. Conversely, non-funded income contracted by 3% YoY, hampered by new regulatory restrictions on fees and commissions, coupled with softer operating environments for non-banking segments.
The sector also marked a notable structural shift as deposit growth—surging 9% YoY and 4% quarter-on-quarter (QoQ)—outpaced credit expansion (8% YoY and 2% QoQ) for the first time in two years. This dynamic, driven by significant government deposit injections and a temporary cooling in credit demand, pulled down the industry’s loan-to-deposit ratio. Consequently, net interest margins (NIMs) held steady on a quarterly basis, aided by a reduction in aggressive pricing competition. While the majority of financial institutions maintained their previous forward-looking targets, Al Rajhi Bank diverged by upwardly revising its NIM guidance for the remainder of the year.
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