RIYADH: The Saudi banking sector has once again demonstrated its robust financial fundamentals and high capacity to adapt to geopolitical challenges and global fluctuations, supported by strong momentum in financing and lending, alongside the continuation of Vision 2030 projects.
Conversely, banks have begun facing a new phase characterized by declining interest rates, intensifying competition for deposits, and rising operating costs — all of which exert growing pressure on margins and profitability.
However, experts believe that strong asset quality, improved liquidity, sustained credit growth, and the diversification of income streams will provide banks with a broader buffer to maintain their performance in the coming period.
The “Saudi Banks Pulse” report by Alvarez & Marsal showed a shift in financing and liquidity trends during the first quarter of 2026; customer deposits grew by 3.9 percent, surpassing the net financing growth of 1.6 percent, after several quarters where the pace of lending exceeded deposit growth.
This shift contributed to reducing the loan-to-deposit ratio to 104.1 percent, compared to 106.5 percent in the previous quarter, indicating an improvement in liquidity levels and a decrease in the financial pressures faced by banks as credit growth accelerated in recent periods.
