Saudi Arabian banks’ loan-to-deposit ratio dropped during the first three months of the year on the back of higher deposit growth.

Total deposits of the kingdom’s main banks went up by 5.9% during the first quarter of 2024 compared to the previous quarter, driven by deposits in current account savings accounts (CASAs), which posted the highest quarter-on-quarter growth of 8.2%, the report from Alvarez & Marsal (A&M) said.

In comparison, the combined loans and advances of the top ten banks grew by 3.5% over the same period.

With the deposit growth outpacing borrowings, the loans-to-deposit ratio (LDR) retreated by 2.2% to stand at 97% in the first three months of 2024.

The lenders’ operating income also grew by 3.8% due to higher fee and non-interest income, up by 16.2%, despite marginal growth in net interest income at 0.8%.

Impairment charges went up by 10.7%, while net income posted a 6% increase.

Overall, most banks, or eight out of ten, witnessed improved profitability. Aggregate net income of the kingdom’s banks increased by 6% to SAR 18.7 billion.

(Writing by Cleofe Maceda; editing by Seban Scaria) Seban.scaria@lseg.com