The Kingdom of Saudi Arabia’s ten largest banks reported continued growth in the second quarter of 2024, driven by increases in loans and advances, deposits and profitability, according to the latest KSA Banking Pulse from Alvarez & Marsal (A&M).
The report analysed the performance of the Kingdom’s largest banks between April and June 2024. Its findings showed that the banks’ aggregate profit after tax increased by 4.3% quarter-on-quarter (QoQ) to SAR 19.5 billion.
The banks’ total operating income rose by 1.9% QoQ reaching SAR 34.8 billion and driven by a 2.5% growth in net interest income (NII). However, non-interest income experienced a slight 0.1% decline. A significant 27.0% reduction in impairment charges further boosted net income by 4.3% QoQ.
Moreover, the banks saw a 3.2% QoQ increase in loans and advances (L&A) during Q2 2024, primarily driven by a 7.2% surge in corporate and wholesale banking. Deposits also saw a 2.3% QoQ rise, led by a 4.1% increase in time deposits. The overall cost of risk reached a multi-year low during the quarter, improving by 11 basis points to 0.28%.
“The continued positive performance in Q2 2024 reflects a balance of growth and improved cost efficiencies among Saudi banks,” commented Asad Ahmed, Managing Director and Head of Middle East Financial Services at A&M.
Ahmed also noted that the potential interest rate cuts expected in September 2024 could impact interest margins, and banks are focusing on non-interest income (mainly fees and commission income) and improved cost efficiencies to navigate future challenges.
The report uses data from the Kingdom’s ten largest listed banks, namely Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB) and Bank Aljazira (BJAZ).