The aggregate net income of Saudi banks grew by 3.4% quarter-on-quarter (QoQ) to reach SAR 22.9 billion ($6.1 billion) in the second quarter of 2025, services firm Alvarez & Marsal (A&M) said in its latest banking pulse report.

This marks a slowdown from a 6.3% growth recorded in Q1 2025.

Total operating income increased 2% in Q2 2025, down from 3.2% in Q1 2025, primarily due to slower growth in net interest income and net fee and commission income.

Net loans and advances (L&A) grew by 2.5% in Q2 2025, moderating from the 5.4% growth recorded in Q1 2025. The expansion was primarily driven by corporate lending, which rose 3.9% QoQ.

Total deposit growth moderated, increasing 2.7% in Q2 2025, compared to 4% in Q1 2025.

Aggregate interest income rose by 4.4% in Q2 2025, reversing the 1.0% QoQ decline registered in Q1 2025.

Saudi banks entered H2 2025 from a position of strength, despite occasional share price volatility, said Quentin Mulet-Marquis, Managing Director, M&A, ME Financial Services, A&M.

The Kingdom’s banking sector remains resilient, supported by strong fundamentals, domestic buffers and increasing profitability and return on equity, he added.

Meanwhile, lower interest rates could put pressure on profits, which is being offset by higher non-interest income, lower risk costs, and strict cost control.
Factors such as strong capital buffers, growing competition, and healthy valuations are expected to encourage more merger and acquisition (M&A) activity in the sector, Mulet-Marquis said.

(Editing by Seban Scaria seban.scaria@lseg.com)