The aggregate net income for the 10 largest Saudi-listed banks increased by 3.8% quarter-on-quarter (QoQ) to 18 billion riyals ($4.80 billion) in the third quarter of 2023, driven by high loan growth and improved net interest margin (NIM).

In addition, aggregate impairment costs fell by 18% QoQ, further supporting growth in net income, Alvarez & Marsal (A&M) said in its latest banking report.

Operating income increased by 2.9% QoQ, primarily on the back of growth in net interest income by 3.8%. Eight out of the top 10 banks have reported improvement in NIMs in the quarter.  

The loan-to-deposit (LDR) ratio improved by 2.3% QoQ on the back of higher loans-and-advances (L&A) which grew to reach 98.4%, representing the highest level seen in the last 4 years.

Deposits grew slightly by 0.5% QoQ, A&M added.

However, overall non-core income declined marginally by 0.5% QoQ, primarily due to a decline in net fee and commission income falling 3.3%.

According to the report, the growth in net income resulted in the return on equity increasing to the highest level of 16.4 percent, up 70 basis points QoQ since the pandemic. Return on assets remained stable at 2% in the third quarter.

(Editing by Brinda Darasha;