14.4 % increased in loans and predecessors in Saudi banks within a year

An economic report revealed that the ten best banks in Saudi Arabia maintained strengths characterized by force, as loans and predecessors increased by 14.4% on an annual basis in the fiscal year 2024, mainly driven by the growth of institutional loan rates (+17.7% on an annual basis).
According to the report, the growth of deposit mobilization slowed to record 7.9% on an annual basis, due to the slowdown in the growth of deposits for the sake, which achieved a growth rate of 4.7% on an annual basis only, in addition to the high rate of loans to the deposits by 6% to 104.7%.

Funding costs

The financing costs increased by 55 annual basis points to record 3.5%, which led to a slight decrease in the net interest margin of 11 annual basis points to reach 3%.
The rate of operational income growth decreased by a small rate, recording a growth rate of 9.3%, which reflects the effect of the net revenues from the fees, commissions and other operational revenues.

The height of net profits

The net profit increased by 13.5% on an annual basis, driven by the decrease in the value of low value, which decreased by 7.5% on an annual basis.
The cost efficiency levels improved with the low cost to income rate to record 31.3% (-63 annual basis points), and the rate of operational income growth for the percentage of operational cost growth (+7.1% on an annual basis) exceeded.
The return on shareholders ’rights increased to record 14.5% (+72 annual basis points) despite the pressure of the margin, while the return on assets remained stable at 2.0%.
According to the report, the cost of risk in Saudi banks has improved slightly by 7 points annual basis to 0.3%.

Improving the cost of risks

Seven out of ten banks recorded an improvement in the cost of risk thanks to the decline in low value fees (-7.5% on an annual basis).
In general, the percentage of troubled loans to net loans decreased by 18 annual basis points to record 1.1% in 2024.
The banks recorded a healthy growth in net profits by 13.5% on an annual basis (compared to +11.8% on an annual basis in the fiscal year 2023).
The total profits reached 79.6 billion riyals, driven by the decline in low value fees. In turn, operating income witnessed 9.3% growth on an annual basis, while operating expenditures remained within the acceptable limits (+7.1% on an annual basis).
Each of the net revenues of fees, commissions and other operational revenues witnessed significant growth of 16.4% and 14.7% on an annual basis, respectively.
The increase in net income resulted in a rise in the return of shareholders ’rights to 14.5% (+72 basis points on a quarterly basis), while the return on the assets maintained its stability during this quarter at 2.0%.

Stability of the banking sector

The report said: “The fifth annual edition of the banking sector performance in the Kingdom of Saudi Arabia demonstrates stability in the banking sector in the Kingdom, which witnessed growth in operating income and a slight increase in returns on the rights of shareholders.”
The report added, that despite the high percentage of loans to deposits and pressure facing net interest margins due to the high costs of financing, banks have improved their profits by raising operational efficiency and reducing low value allocations.
According to the report issued by Alvarez & March, the strategic initiatives within the framework of the Saudi Vision 2030, along with the strong capitalization of the sector, will play a pivotal role in facing future economic conditions.