Saudi Banks Show Strong Growth in 2023
In 2023, top Saudi banks demonstrated impressive performances, with a 9.5 percent growth in operating income fueled by non-interest revenue, as reported by professional services firm Alvarez & Marsal.
Resilient Financial Sector in Saudi Arabia
Alvarez & Marsal’s fourth annual Kingdom of Saudi Arabia Banking Pulse revealed a resilient and thriving financial sector, with significant increases in key metrics.
Robust Performance of Top 10 Banks
The top 10 banks in the Kingdom showed robust and positive performance, with a 9.5 percent growth in operating income driven by higher non-interest income, according to the firm.
Key Players in the Financial Sector
The banks analyzed by Alvarez & Marsal included Saudi National Bank, Al-Rajhi Bank, Riyad Bank, Saudi British Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad, Saudi Investment Bank, and Bank Aljazira.
Improvement in Key Metrics
The report highlighted a significant improvement in the net interest margin by 3.5 percent, contributing to increased profitability in the sector. Return on equity also rose to 14.5 percent, showcasing strong financial health.
Enhanced Liquidity and Stability
Liquidity saw a notable enhancement due to record government-related entity deposits, which improved liquidity conditions in the banking system. The sector’s stability was positively impacted by a slight decline in the cost of risk.
Industry’s Resilience Amid Challenges
Asad Ahmed, managing director at Alvarez & Marsal, emphasized the industry’s resilience in the face of economic challenges. He highlighted the stability and growth potential of the Saudi banking sector in the firm’s fourth annual KSA Banking Pulse report.
Positive Outlook for Saudi Banks
Alvarez & Marsal predicts a positive outlook for KSA banks, with expected loan growth, improving asset quality, and well-capitalized books playing a central role in achieving Saudi’s Vision 2030 objectives.
Strengthening Financial Sector in UAE
In the UAE, the financial sector has also shown positive growth, with increasing profitability and higher return ratios for most banks. A stable net interest margin of around 3 percent is anticipated for Saudi banks, highlighting their adaptability in navigating dynamic market conditions.