Saudi bank profits rise 3.9% to 9B

The Saudi banking sector continued to see profit growth in August, amounting to approximately 9.01 billion riyals—an increase of about 3.9% year-on-year and 6% month-on-month. Since the beginning of the year, profits have accumulated to 71.5 billion riyals, up by 5.3%. Total banking credit rose to around 3.46 trillion riyals, reflecting a year-over-year growth rate of nearly 7%, surpassing the deposit growth of approximately 5.7%. Despite declining interest rates, the increase in higher-cost deposits by 24% led to a rise in the ratio of paid deposits (time and savings deposits) from 38.6% a year earlier to 45.4%. This puts pressure on profit margins; however, credit expansion and capital growth (which grew by 9.6% to 676 billion riyals) helped sustain the sector’s profit growth despite lower returns from the money market and a partial reduction in financing costs. Reports expect banks to maintain profit growth by increasing business volume and credit, despite challenges related to rising financing costs and changes in the deposit mix.

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