Arab News, Tues, Nov 28, 2023 | Jumada Al-Uola 14, 1445
Saudi banks Q3 net income grew 3.7% to reach $4.8bn
RIYADH:
Saudi Arabia’s banking sector saw a 3.74 percent quarterly increase in
aggregate net income in the third quarter of 2023 to reach SR18.03 billion
($4.8 billion) from SR17.38 in the previous quarter, according to a recent
report.
In its latest report, global professional services firm Alvarez & Marsal
highlighted that the operating income of Saudi banks increased by 2.9
percent quarter on quarter, primarily fueled by a 3.8 percent growth in net
interest income.
However, a slight decline in non-core income, 0.5 percent, partially offset
these gains. Reducing impairment charges by 17.9 percent quarter on quarter
also played a key role in bolstering net profit growth.
A notable improvement was observed in the loan-to-deposit ratio, which
climbed by 2.3 percent quarter on quarter, reaching 98.4 percent — the
highest in four years.
This surge was underpinned by a robust growth in loans and advances,
outpacing the rise in deposits.
Return on equity for Saudi banks also improved by 70 basis points quarter on
quarter, reaching 16.4 percent, while return on assets remained steady at 2
percent.
A moderate growth trajectory was seen in both lending and deposit
mobilization, with loans and advances expanding by 2.9 percent quarter on
quarter, surpassing deposit growth, which stood at 0.5 percent.
Key trends for the third quarter of 2023 showed corporate and wholesale
lending as the primary driver of a 2.9 percent quarter on quarter increase
in loans and advances.
The total operating income also saw a marginal decline of 2.9 percent
quarter on quarter, with a notable increase in aggregate net interest income
to SR26.3 billion.
The cost-to-income ratio experienced a slight deterioration due to increased
operating expenses, and the cost of risk showed improvement, reflecting
enhanced asset quality across the sector.
The report, using data from 16 different metrics, evaluates key performance
areas of banks, including size, liquidity, income, efficiency, risk,
profitability, and capital.
The report’s analysis included the top 10 listed banks in Saudi Arabia,
including Saudi National Bank, Al Rajhi Bank, Riyad Bank, Saudi British
Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad,
Saudi Investment Bank, and Bank AlJazira.