Saudi Arabia's banking sector has reinforced its position as a cornerstone of the national economy, posting a record start to 2026 with unprecedented first-quarter profits. The Kingdom's 10 listed banks reported combined net profit of $6.4 billion (SR23.95 billion) in the first quarter, marking a 7.6 percent increase compared to the same period last year. This performance underscores the sector's ability to convert the momentum generated by Vision 2030 into sustained financial gains.
Key Drivers of Profit Growth
The impressive results were driven by strong performances from major lenders, including Saudi National Bank, Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Arab National Bank. The other banks in the cohort are Alinma Bank, Bank Albilad, the Saudi Investment Bank, and Bank AlJazira.
Al Rajhi Bank Leads the Pack
Al Rajhi Bank topped the sector with a profit increase of 14.3 percent, reaching SR6.75 billion. The bank attributed this growth to an 18.4 percent rise in net financing and investment income, stronger returns on financing and investment, a 14.4 percent increase in operating income, higher banking fees and foreign exchange income, and lower depreciation expenses.
Saudi National Bank and Riyad Bank
Saudi National Bank ranked second, reporting net profit of SR6.42 billion, up 6.66 percent. The growth was driven by a 3.1 percent rise in financing and investment income to SR14.8 billion, supported by expansion in its lending portfolio, higher operating income, and lower operating expenses, including reduced expected credit-loss provisions. Riyad Bank held third place with profit of nearly SR2.61 billion, up 5.1 percent, citing higher trading income and stronger special commission income, along with lower losses on non-trading investment sales.
Structural Drivers Behind the Record Performance
Financial markets analyst and member of the Saudi Economic Association Sulaiman Al-Humaid Al-Khaldi told Asharq Al-Awsat that the record performance was driven by four main factors: elevated interest rates supporting margins, growth in mortgage and corporate lending linked to mega-projects, improving asset quality and lower provisioning, and government spending tied to Vision 2030 that created new financing opportunities. He emphasized that the results reflect the resilience of Saudi banking, led by Al Rajhi and Saudi National Bank.
Al-Khaldi stated: "This performance confirms the strength of the Kingdom's banking model and its ability to benefit from a positive economic environment, with financing demand from individuals and companies remaining strong." He noted that the sector earned more than SR95 billion in 2025, up 16 percent from the previous year, and profits could top SR100 billion in 2026. While possible interest-rate cuts could pressure margins, stronger financing demand and government capital spending should remain key growth drivers.
Economic Momentum and Future Outlook
Economic analyst and founder and CEO of G.WORLD Mohamed Hamdy Omar said the record profits reflect the banking sector's role as a major beneficiary of domestic economic growth. He told Asharq Al-Awsat that the 7.6 percent rise in profit was driven not by temporary cyclical factors but by sustainable structural trends, notably continued credit growth linked to Vision 2030 projects such as Neom, alongside expanding mortgage and retail lending.
Omar remarked that banks have also benefited from stronger net interest margins, helped by faster asset repricing than liabilities in recent periods. Moreover, diversified revenue streams reduced reliance on interest income, particularly through fees from payments, asset management, and digital services, while cost discipline and improving asset quality also supported profitability. Digital transformation was delivering measurable gains in operational efficiency, especially at larger banks.
Omar expected the sector to maintain strong performance in 2026, supported by financing demand and government capital expenditure, although falling rates could gradually pressure profit margins. Improving conditions in the non-oil economy should also support asset quality, leaving the sector in a position of strength even as growth shifts to a more sustainable pace.
