RIYADH: Saudi banks’ profits before zakat and tax rose 6.1 percent year on year to SR8.24 billion ($2.18 billion) in April, according to data from the Kingdom’s central bank.
The annual increase came even as monthly profits fell 18 percent from March, bringing April earnings to their lowest level in six months.
The banking sector’s performance comes as Saudi Arabia continues to balance strong credit demand driven by Vision 2030 projects with tighter liquidity conditions.
Rapid lending growth in recent years has outpaced deposit expansion, prompting banks to increasingly tap capital markets and external funding sources to support financing needs tied to the Kingdom’s economic diversification agenda.
Speaking to Arab News, Vijay Valecha, chief investment officer at Century Financial said: “Overall, Saudi banks are better positioned than many emerging market banking systems.”
The gap between lending and deposits translated into a meaningful improvement in liquidity conditions. The simple loan-to-deposit ratio fell 116 basis points to 108.8 percent, now sitting 440 basis points below its November peak of 113.2 percent. The Saudi Central Bank-adjusted loan-to-deposit ratio declined to 78.9 percent.
The balance sheet of the Saudi Central Bank — also known as SAMA — contracted, with total assets falling SR15.9 billion month on month to SR1.95 trillion in April.
The decline was mainly linked to lower deposits with banks abroad and lower miscellaneous assets, even as investments in foreign securities increased.
Commercial banks’ total assets, however, moved in the opposite direction, rising SR9.6 billion to SR5.08 trillion in April.
Saudi bank deposits climbed by SR52 billion month on month to SR3.1 trillion in April. Time and savings deposits rose SR75.3 billion to SR1.32 trillion, while demand deposits fell SR37.3 billion to SR1.47 trillion.
The April figures come against a more cautious backdrop for Saudi banks as regional geopolitical risks add to existing funding pressures.
Fitch Ratings warned in April that Saudi banks’ asset quality, profitability and liquidity could come under pressure if the Iran conflict becomes more prolonged or severe than its base case, with credit growth already outpacing deposit growth.
The agency said the sector’s Fitch-calculated loans-to-deposits ratio reached a record 108 percent at the end of 2025, while external liabilities rose to about SR650 billion, underscoring banks’ greater reliance on external funding.
Fitch also said banks should be able to withstand a short-term liquidity stress scenario involving a 10 percent deposit outflow without official support, although liquidity buffers at some lenders would come under strain.
Credit activity remained positive during the month. Bank claims on the private sector increased SR20.1 billion to SR3.23 trillion, while claims on the public sector rose SR8.8 billion to SR922.7 billion.
Banks’ foreign position also improved. Foreign assets rose to SR431 billion in April from SR420.5 billion in March, while foreign liabilities fell to SR661.5 billion from SR682.8 billion.
As a result, net foreign liabilities narrowed to SR230.5 billion, compared with SR262.3 billion a month earlier.
Mortgage market rebounds
An analysis of SAMA’s figures by Al Rajhi Capital noted that new mortgage originations jumped 51.1 percent month on month to SR6.3 billion in April, the strongest figure in nine months.
The report noted that the four-month 2026 average of SR5.5 billion is “only 4 percent down with trailing 12-month average of SR5.7 billion,” a sign the market may be stabilizing after a sharp year-on-year decline.
In an interview with Arab News, Sandeep Puri, partner and head of finance for the Middle East at Addleshaw Goddard, said: “We have seen a number of positive regulatory developments in the past 12-18 months in the KSA real estate market as part of the broader Vision 2030.
“This has steadily translated into growing numbers of both national and non-nationals investing in the real estate market and therefore higher mortgage numbers.”
