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RIYADH: Saudi Arabia’s top 10 listed banks recorded all-time high net profits in 2024 of SR79.64 billion ($21.23 billion), reflecting a 13.84 percent annual increase, according to data from the Saudi Exchange.

The robust performance was driven by strong lending growth, declining interest rates, and increased participation in debt markets.

Saudi National Bank, known as SNB AlAhli, led the sector, accounting for 26.6 percent of total banking profits at SR21.19 billion, followed closely by Al Rajhi Bank, which contributed 24.8 percent, reaching SR19.72 billion.

These two banks constituted about 51.4 percent of the sector’s total profits.

Among the banks with the highest annual growth, Arab National Bank topped the list with a 21.98 percent rise in net profits to SR4.97 billion. Bank AlJazira followed with a 20.69 percent increase, reaching SR1.23 billion, despite holding the smallest share of sector profits at 1.5 percent.

Total assets for the top 10 Saudi banks surged to SR4.21 trillion in 2024, marking a 13.6 percent increase year on year. SNB AlAhli held the largest asset base at SR1.1 trillion, followed by Al Rajhi Bank at SR974.39 billion, with both banks collectively accounting for 49 percent of the sector’s total assets.

Al Rajhi Bank recorded the fastest asset growth, expanding by 20.58 percent, followed by Saudi Investment Bank, which grew by 20.53 percent to reach SR156.67 billion.

Saudi Arabia’s banking sector is poised to sustain its profitability in 2025, bolstered by strong credit growth and corporate lending tied to Vision 2030 projects, according to an S&P Global report released in January.

The financial services agency projected that bank lending would expand by 10 percent, driven primarily by corporate loans as the Kingdom continues to invest heavily in large-scale economic initiatives.

The outlook remains positive as stable credit growth, supported by easing interest rates and a favorable economic environment, is expected to maintain banks’ profitability, with return on assets estimated to remain between 2.1 percent and 2.2 percent.

The report further highlighted that banks may increasingly turn to international capital markets to finance Vision 2030-related investments, ensuring a steady flow of liquidity. Meanwhile, mortgage lending is also anticipated to rise, supported by lower borrowing costs and demographic trends fueling demand for residential properties.

Saudi banks have also maintained a dominant presence in the stock market, leading Tadawul’s trading activity in 2024’s fourth quarter with a 17 percent market share, surpassing the materials and energy sectors.

Bank loans and main growth drivers

Saudi banks’ total loans and advances to customers grew by 14.41 percent year on year in 2024, reaching SR2.81 trillion, while deposits rose by 7.87 percent to SR2.68 trillion during the same period.

Al Rajhi Bank led in loan issuance, providing SR693.4 billion, a 16.8 percent increase from the previous year, followed by SNB AlAhli with SR654.25 billion and Riyadh Bank with SR274.4 billion.

With the Saudi riyal pegged to the US dollar, the Kingdom’s central bank, known as SAMA, mirrors Fed rate movements. After interest rates peaked at 6 percent in 2024, they began to decline in September, reducing borrowing costs.

According to SAMA, 11.28 percent of total bank loans — 21 percent of corporate loans— were allocated to real estate, a key enabler of the Kingdom’s infrastructure expansion.

Saudi Investment Bank posted the highest loan growth rate at 23.18 percent, reaching SR99.47 billion, followed by Saudi First Bank with a 20.10 percent increase to SR259.35 billion.

Deposits and funding strategies

Bank deposits for the top 10 Saudi banks reached SR2.68 trillion in 2024, with Al Rajhi Bank holding the highest share at SR628.24 billion, followed by SNB AlAhli at SR579.76 billion.

The strongest deposit growth was seen in Riyadh Bank, which expanded by 20.21 percent to SR306.42 billion, followed by Bank AlJazira with a 15 percent increase to SR108.19 billion.

As lending growth outpaces deposit expansion, Saudi banks have increasingly turned to the debt capital market to fund their credit expansion.

According to Fitch Ratings, Saudi banks have significantly increased their international debt issuance since 2020, aligning with their long-term growth strategies and foreign-currency funding needs.

The GCC banking sector is projected to issue more than $30 billion in US dollar-denominated debt in 2025, following a record $42 billion in 2024, according to Fitch.

This surge is primarily driven by nearly $23 billion in maturing debt, lower US interest rates, and sustained regional credit demand, particularly in Saudi Arabia and the UAE.

In 2024, GCC banks represented 18 percent of all emerging-market bank debt issuance in US dollars — a figure that rises to 36 percent when excluding Chinese banks. Strong global investor confidence, supported by stable oil prices projected around $70 per barrel in 2025, has further strengthened regional debt markets.

Short-term certificates of deposit emerged as a key instrument in GCC bank funding strategies, accounting for 21 percent of total debt issuance in 2024. 

RIYADH: Saudi Arabia holds the largest share of the Gulf Cooperation Council’s debt capital market, with 44.8 percent of outstanding issuances, according to Fitch Ratings.

The US-based agency claims the GCC’s total DCM surpassed the milestone of $1 trillion at the end of January, reflecting a 10 percent year-on-year growth across all currencies. 

Saudi Arabia, alongside the UAE, boasts the most mature financial landscape, with both countries leading in sukuk and bond issuances. 

Fitch expects the Kingdom to play a pivotal role in driving US dollar debt and sukuk issuance in 2025 and 2026, as Saudi Arabia’s financial institutions and corporations increasingly turn to international debt markets to diversify funding sources, with banks alone anticipated to issue over $30 billion in US dollar-denominated debt this year. 

In a different report issued earlier this month, Fitch expected Saudi Arabia’s debt capital market to hit $500 billion by the end of 2025, fueled by economic diversification efforts under Vision 2030.

The DCM, which involves the trading of securities like bonds and promissory notes, serves as a key mechanism for raising long-term capital for both businesses and governments.

In its latest report, Fitch Ratings said: “Falling oil prices could lead to further DCM growth as lower government revenues could lead to increased borrowing.” 

It added that the anticipated reduction in US Federal Reserve interest rates in 2025 is expected to create a more favorable funding environment, with GCC central banks likely to follow suit. 

Saudi Arabia and the UAE, in particular, are set to benefit from this trend, further solidifying their positions as key regional and global financial hubs. 

GCC’s growing role in global debt markets 

The GCC accounted for a quarter of all emerging-market US dollar debt issued in 2024, excluding China, with Saudi Arabia, Turkiye and the UAE leading the way.. 

GCC US dollar DCM issuance surged by 65.8 percent year on year in 2024 to $133.4 billion, underscoring the region’s increasing reliance on international debt markets. New GCC fund passporting regulations could enhance DCM investment opportunities. 

Sukuk remained a key financing tool, making up 40 percent of the GCC’s total DCM as of January. Saudi Arabia and its regional counterparts contributed over 40 percent of global sukuk issuance, with GCC volumes soaring 43 percent year on year in 2024 to $87.5 billion. 

Notably, nearly 80 percent of Fitch-rated GCC sukuk are investment-grade, with the majority falling within the “A” category, while the remainder is mostly split between AA, BBB, BB, and B ratings. 

Most issuers are on “Stable Outlook”’ with the rest mainly on “positive.” Islamic banks played a crucial role in the sukuk ecosystem, both as issuers and investors, reinforcing the Kingdom’s leadership in Islamic finance. 

Challenges such as Shariah compliance complexities could impact sukuk structuring and issuance, Fitch warned. 

Saudi Arabia and UAE dominate ESG debt market 

The GCC’s environmental, social, and governance debt market surpassed $50 billion in outstanding issuances by the end of January, according to the ratings agency. 

Saudi Arabia and the UAE led this segment, with ESG debt representing 7.3 percent of the Kingdom’s total dollar debt issuance in 2024. 

ESG-debt issuance was also a sizable part — 17 percent — of dollar debt issuance in the UAE. 

“ESG debt could help issuers tap demand from ESG-sensitive international investors from the US, Europe and Asia,” Fitch said. 

Challenges and future prospects 

Despite its rapid expansion, the GCC’s DCM faces hurdles, including a bank-dominated investor base, a preference for bank financing over capital market funding, and limited local-currency debt issuance outside of Saudi Arabia. 

The Kingdom’s riyal-denominated market is the most developed in the region but “still has more room for growth,” according to Fitch. 

Kuwait became the GCC’s third-largest dollar debt issuer in 2024, with a total of $13.6 billion, led by banks. This is despite the absence of the public debt law, which would enable sovereign borrowing. 

Historically, US dollar issuances from Kuwait have been sporadic and rare, with only $11.8 billion issued between 2018 and 2023. “Kuwait’s new government plans to revise liquidity laws to facilitate capital market borrowing, but the timeline is uncertain,” Fitch said.