Saudi-listed banks posted a combined net profit of 24 billion Saudi riyals ($6.4 billion) in the first quarter of 2026, marking an 8% year-on-year (YoY) increase and surpassing market consensus estimates by 3%, according to a new report by Alrajhi Capital.
The earnings growth was primarily driven by strong performances from Al Rajhi Bank, Saudi National Bank, and Bank Albilad, despite ongoing geopolitical tensions stemming from the Iran war that began on February 28.
According to the report, funded income rose 8% YoY, while provisions declined sharply by 38%, significantly supporting bottom-line growth across the banking sector.
However, non-funded income fell 3% YoY due to regulatory changes affecting fees and commissions, alongside weaker operating conditions for non-banking business segments.
On the balance sheet side, deposits increased 9% YoY and 4% quarter-on-quarter (QoQ), exceeding credit growth for the first time in two years. Credit growth stood at 8% YoY and 2% QoQ.
Alrajhi Capital attributed the shift to strong government-related deposit inflows and relatively softer credit demand, which collectively reduced the sector’s loan-to-deposit ratio.
As a result, net interest margins (NIMs) remained stable on a QoQ basis, supported by easing pricing competition among banks.
Most banks maintained their existing guidance for the year, while Al Rajhi Bank revised its NIM guidance upward, reflecting confidence in margin sustainability, the report added.
