Alvarez & Marsal: Saudi Banking Sector Shows Strong Growth in Q2 2026
Alvarez & Marsal's analysis of Saudi Arabia's largest banks in Q2 2026 reveals robust growth in loans and deposits. Profitability improved, though credit risk costs increased.
The Saudi Arabian banking sector demonstrated strong performance in the second quarter of 2026, according to Alvarez & Marsal's KSA Banking Pulse report. Aggregate loans for the ten largest listed banks increased by 1.8% quarter-on-quarter, while deposits grew at a faster pace of 2.7%.
Operating income rose by 5.1% from the previous quarter to SAR 42.5 billion, primarily driven by a 38.5% surge in other operating income. Net interest income and net fee and commission income also saw growth of 2.1%.
Bank profitability improved, with return on equity (RoE) increasing to 15.0% and return on assets (RoA) reaching 2.1%. The net interest margin (NIM) remained stable at 2.85%. The cost-to-income ratio improved to 28.6%, reflecting ongoing cost optimization.
However, asset quality metrics showed mixed results. The non-performing loan (NPL) ratio held steady at 0.9%, and the coverage ratio improved slightly to 162.7%. The cost of risk (CoR) increased to 0.32%, indicating prudent risk management by the banks.