Saudi banks post 2.5% loan growth in Q3 as corporate credit leads: Alvarez & Marsal 

The steady lending momentum aligns with the wider trend observed in the Gulf Cooperation Council region. Shutterstock
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Updated 23 December 2025
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Saudi banks post 2.5% loan growth in Q3 as corporate credit leads: Alvarez & Marsal 

RIYADH: Saudi Arabia’s 10 largest listed banks recorded a 2.5 percent increase in net loans and advances in the third quarter from the previous three months, underscoring sustained lending momentum in the Kingdom, a new analysis showed. 

The growth was driven by corporate lending, which rose 3 percent during the period and accounted for roughly 59 percent of total loans, according to Alvarez & Marsal’s latest KSA Banking Pulse report. 

This steady lending momentum aligns with the wider trend observed in the Gulf Cooperation Council region, where corporate lending continues to gain traction as economies diversify away from hydrocarbons. 

In November, S&P Global Ratings said banks across the GCC are expected to maintain stable credit fundamentals in 2026, even as the region faces potential geopolitical and economic shocks.

The rating agency added that the sector’s outlook is supported by broadly steady profitability, solid capitalization, and resilient asset quality. 

Commenting on the findings, Sam Gidoomal, managing director and head of Middle East Financial Services at Alvarez & Marsal, said: “Saudi banks continued to demonstrate operational resilience during the third quarter of 2025, supported by stable lending activity, disciplined cost management, and improving asset quality.” 

Retail lending in the Kingdom increased by 1.7 percent quarter on quarter during the period, according to the report. 

Deposit growth moderated to 2.2 percent, down from 2.7 percent in the second quarter. 

“The deceleration in deposits was largely attributable to SNB, which recorded a 2.9 percent quarter on quarter decline, driven by a sharp 7.9 percent quarter on quarter contraction in time deposits,” the report stated. 

Government-related entity deposits saw a marginal decline in the third quarter, with their share falling to 31.2 percent of total deposits. 

Operating income among Saudi banks increased by 1.8 percent in the third quarter, moderating slightly from the 2 percent rise recorded over the previous three months. 

Net interest income was broadly flat, edging up 0.1 percent quarter on quarter, while fee and commission income rose 3.8 percent during the same period. 

Aggregate net income increased by 2.8 percent in the third quarter, compared with 3.4 percent growth in the previous three months. 

“Despite margin compression, the sector’s strong capital position and consistent efficiency gains position banks well as they prepare for an evolving interest-rate environment in 2026,” added Gidoomal. 

Net interest margins contracted by 7 basis points to 2.73 percent, reflecting continued pressure from rising funding costs, the report said. 

Banks also demonstrated stronger cost discipline, with operating expenses declining 0.9 percent quarter on quarter, marking a third consecutive improvement in efficiency. The aggregate cost-to-income ratio fell 80 basis points to 28.7 percent in the third quarter. 

Return on equity edged higher by 6 basis points to 15.5 percent, while return on assets remained steady at 2.1 percent, underscoring sustained sector resilience. 

Asset quality strengthened further, with the non-performing loan ratio declining to 0.94 percent and the coverage ratio rising to 158.1 percent. 

“Saudi banks are maintaining solid financial foundations despite periods of global market volatility,” said Quentin Mulet-Marquis, managing director, Financial Services at Alvarez & Marsal.  

He added: “Strong earnings, low NPL rates, and comfortable capital buffers underpin investor confidence, while healthy valuation multiples and competitive dynamics continue to support growing appetite for mergers and acquisitions activity in the sector.”  

The Saudi banks analyzed in the Alvarez & Marsal report are Saudi National Bank, Al Rajhi Bank, and Riyad Bank, as well as Saudi British Bank, and Banque Saudi Fransi. 

Other banks covered include Arab National Bank, Alinma Bank, and Bank Albilad, alongside Saudi Investment Bank, and Bank Aljazira. 

Earlier in December, a separate report by S&P Global said Saudi Arabia’s private credit market is set to expand rapidly as the Kingdom seeks to bridge funding gaps linked to its Vision 2030 transformation agenda. 

The report noted that the Kingdom’s public and private sector debt — including bank lending, bond and sukuk issuance, and private capital financing — grew at a compound annual rate of 12 percent between 2021 and 2024. 


From barrels to bytes: How AI is powering Saudi Arabia’s industrial transformation

Updated 08 January 2026
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From barrels to bytes: How AI is powering Saudi Arabia’s industrial transformation

  • Inside the Kingdom’s drive to merge energy expertise with digital intelligence

RIYADH: Artificial intelligence is moving beyond concept to become a cornerstone of Saudi Arabia’s energy sector, reshaping how oil, gas, and power systems are managed and optimized.

Industry giants like Saudi Aramco are embedding smart systems into their operations to boost efficiency, reliability, and sustainability—key pillars in the Kingdom’s efforts to modernize its industrial base and diversify its economy.

According to the International Energy Agency, oil and gas companies were among the first to adopt digital technologies. The agency estimates that applying AI to power plant operations and maintenance could save up to $110 billion annually by 2035 through reduced fuel consumption and maintenance costs.

For Saudi Arabia, this technological momentum offers both a blueprint and an opportunity. Under Vision 2030, integrating data and intelligent automation is transforming how energy is explored, refined, and delivered.

At the heart of Saudi Aramco’s operations is a digital transformation strategy centered on artificial intelligence, big data, and the industrial Internet of Things. These technologies are applied at every stage of production—from mapping reservoirs and optimizing drilling to improving efficiency and safety.

AI also underpins Aramco’s Digital Transformation Program, which develops in-house smart tools and data-driven platforms designed to cut emissions, reduce costs, and enhance performance while ensuring a reliable energy supply.

A prime example is the Upstream Innovation Center, where engineers have implemented AI solutions that reduce fuel gas use in boilers, improve efficiency, and detect potential leaks through fiber-optic monitoring. At the Khurais oil field, more than 40,000 sensors monitor approximately 500 wells via an Advanced Process Control system—the first of its kind for a conventional oil field at Aramco. Digitization at Khurais has increased production by around 15 percent, doubled troubleshooting speed, and lowered both costs and environmental impact.

These advances illustrate how Aramco’s network is evolving into a connected, adaptive model, blending traditional engineering expertise with digital intelligence.

DID YOU KNOW?

• AI could save up to $110 billion a year in global power plant fuel and maintenance costs by 2035.

• Advanced Process Control enables real-time monitoring of hundreds of oil wells in the Kingdom.

• AI-powered simulations now replace weeks of manual analysis, enabling faster operational decisions.

As Saudi Arabia develops an AI-driven energy economy, the King Abdullah University of Science and Technology is bridging the gap between digital innovation and industrial application. 

Bernard Ghanem, chair of the Center of Excellence for Generative AI, said the university is working with Saudi Aramco to develop AI systems that predict the chemical properties of materials and accelerate research into direct air capture technologies for carbon dioxide removal.

He told Arab News that KAUST is partnering with SABIC and ACWA Power to apply AI in process optimization and materials discovery, turning lab-scale research into practical solutions for the energy sector.

Ghanem said KAUST’s generative AI materials program combines a robotic chemistry lab with its AI Chemist foundation model, a system that accelerates the development of catalysts, battery materials, and membranes for clean energy applications.

“This is our lab of the future, automating experimentation and speeding up energy innovation,” he said.

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Mani Sarathy, professor of chemical engineering at KAUST, noted that AI-based reinforcement learning tools are already improving efficiency in hydrocarbon refineries by enhancing simulations and shortening analysis cycles.

“AI is helping energy companies run complex simulations that once took weeks, enabling faster and more precise operational decisions,” he told Arab News.

Sarathy added that the next phase will combine automation with expert oversight. Hybrid human-AI control systems, he explained, are likely to become standard in critical operations, balancing digital autonomy with safety and reliability as Saudi industries expand AI deployment.

These efforts highlight KAUST’s growing role in transforming AI from an academic discipline into a driver of industrial innovation in Saudi Arabia’s energy sector under Vision 2030.

Meanwhile, Skeleton Technologies is bringing AI-driven energy storage solutions to Saudi partners, solutions that are already reshaping industrial systems across Europe and beyond. In Europe, the company combines artificial intelligence and advanced materials to reduce energy use and improve efficiency in data centers, electricity grids, and defense systems.

“Our solutions allow AI infrastructure to consume less electricity and reduce grid connection needs, making AI operations more energy efficient,” Arnaud Castaignet, vice president of government affairs and strategic partnerships at Skeleton, told Arab News.

Inside its factories, Skeleton uses AI-driven digital twin models, created with Siemens Digital Industries, to simulate production, optimize operations, and enable predictive maintenance, Castaignet said. At the core of its technology is curved graphene, a proprietary carbon material that gives Skeleton’s supercapacitors exceptional conductivity.

“It allows our supercapacitors to charge and discharge within microseconds, around 12 microseconds, something batteries cannot do,” Castaignet said.

The company’s flagship Graphene GPU system, built on these supercapacitors, cuts energy use in AI data centers by up to 40 percent and reduces grid requirements by 45 percent while boosting computing performance. The devices are free of lithium, nickel, and cobalt, relying instead on graphene derived from silicon carbide—essentially sand—processed entirely in Germany.

“To build sustainable AI infrastructure, you need energy-saving hardware as well as renewable power,” Castaignet added. “Our Graphene GPU shows both can work together.”

As Saudi Arabia continues linking engineering expertise with digital intelligence, its industrial progress is measured not only in barrels of oil but also in bytes, data, and the smart systems shaping its energy future.