• Aggregate net profit increased 9.3 percent quarter-on-quarter (QoQ)
  • Loans and advances (L&A) growth continued to outpace deposits’ growth

Kingdom of Saudi Arabia – Leading global professional services firm Alvarez & Marsal (A&M) has released its latest Saudi Arabia (KSA) Banking Pulse for Q3 2022. The report suggests the top 10 banks in the Kingdom witnessed robust growth in profitability as net profit increased 9.3 percent QoQ resulting in a return on equity (RoE) of 14.8 percent in Q3’22. Profitability was underpinned by higher total interest income of 15.9 percent QoQ and lower impairment charges for the quarter of 15.4 percent QoQ.

In the third quarter, aggregate L&A grew by 2.9 percent QoQ and continued to outpace the growth in deposits 0.2 percent QoQ. The operating income increased by 4.9 percent QoQ, primarily driven by growth in total interest income mainly due to higher interest rates. The sector continued to see improvement in cost efficiency with decline in cost-to-income (C/I) ratio by 0.9 percent QoQ in Q3’22. The cost of risk (CoR) declined by 9bps QoQ to 0.4 percent due to reduction in impairment charges.

Furthermore, return on assets (RoA) improved 12bps QoQ as net profit grew faster than the underlying average asset base of 2.8 percent QoQ. In terms of asset quality, non-performing loans (NPL) / net loan ratio improved from 1.6 percent in Q2’22 to 1.5 percent in Q3’22 while coverage ratio declined to 152.0 percent.

A&M’s KSA Banking Pulse examines data of the 10 largest listed banks in KSA, comparing the Q3’22 results against Q2’22 results. Using independently sourced published market data and 16 different metrics, the report assesses banks’ key performance areas, including size, liquidity, income, operating efficiency, risk, profitability, and capital.

The country’s 10 largest listed banks analyzed in A&M’s KSA Banking Pulse are Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB) and Bank Aljazira (BJAZ).

The prevailing trends identified for Q3 2022 are as follows:

  1. Aggregate L&A increased by 2.9 percent QoQ in Q3’22, whereas aggregate deposits grew at a much slower pace of 0.2 percent QoQ. Consequently, industry wide loan-to-deposit ratio (LDR) continued to increase for the seventh consecutive quarter by 2.6 percent QoQ to settle at 96.2 percent in Q3’22.
  2. Operating income grew at a faster pace in Q3’22 than the previous quarter. The moderate growth of 4.9 percent QoQ is driven by the increase in net interest income of 5.3 percent QoQ and was further supported by growth in other operating income of 17.7 percent QoQ. As SAIBOR increased by 184bps in Q3’22, the aggregate total interest cost increased by 67.8 percent QoQ.
  3. Net interest margin (NIMs) expanded marginally as higher funding costs offset improvement in credit yield. NIM improved marginally by 7bps QoQ to 3.05 percent as aggregate net interest income increased by 5.3 percent QoQ. The rising benchmark rates in Q3’22 led to an improved yield on credit to 5.9 percent. Aggregate cost of funds deteriorated by 45bps QoQ to 1.2 percent, primarily due to increased SAIBOR. Eight out of the top 10 banks in KSA reported an expansion in NIM for Q3’22.
  4. Saudi banks exhibited improved cost efficiency for the third consecutive quarter. C/I ratio improved 88bps QoQ to reach 31.9 percent. The drop in C/I ratio stemmed from growth in operating income of 4.9 percent QoQ which outpaced the growth in operating expense of 2.1 percent QoQ. Eight out of 10 banks saw improvement in cost efficiency.
  5. Six out of top 10 banks reported a decline in CoR during the quarter. The aggregate CoR declined by 9bps QoQ to settle at 0.4 percent due to a substantial drop in impairment charges of 15.4 percent QoQ. SABB reported the highest decline in impairment charges of 72.4 percent QoQ.
  6. RoE for KSA banks improved over the past three quarters to reach above the pre-pandemic level. Aggregate net profit of the top 10 banks grew moderately by 9.3 percent QoQ in Q3’22, faster than the previous quarter of 2.7 percent QoQ. This resulted in an increase of 1.3 percent QoQ in the aggregate RoE to settle at 14.8 percent for Q3’22. Similarly, RoA improved by 0.1 percent QoQ to 2.0 percent in Q3’22 and return on risk-weighted assets (RoRWA) improved by 0.2 percent QoQ to 2.6 percent in Q3’22.


The table below sets out the key metrics:



Q2 2022

Q3 2022


Loans and Advances Growth (QoQ)



Deposits Growth (QoQ)




Loan-to-Deposit Ratio (LDR)



Income & Operating Efficiency

Operating Income Growth (QoQ)



Operating Income / Assets



Non-Interest Income / Operating Income



Yield on Credit (YoC)



Cost of Funds (CoF)



Net Interest Margin (NIM)



Cost-to-Income Ratio (C/I)




Coverage Ratio



Cost of Risk (CoR)




Return on Equity (RoE)



Return on Assets (RoA)



Return on Risk-Weighted Assets (RoRWA)




Capital Adequacy Ratio (CAR)



Source: Financial statements, investor presentations, A&M analysis

Mr. Asad Ahmed, Managing Director and Head of Middle East financial services at A&M commented: “Overall, rising interest rates, improvement in asset quality and strong economic rebound are positives for the banking sector in Saudi Arabia. The Saudi Central Bank (SAMA) has increased its interest rates in line with the US Federal Reserve with a hike of 1.5 percent in Q3’22 to curb inflation. We expect SAMA to continue matching policy rate hike by the US Federal Reserve, which will help boost the overall banking sectors NIMs. The profitability growth is expected to continue for KSA banks as the interest rate outlook remains in an upward trajectory.”


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Kiran Makhija/ Prerna Agarwal
Hanover Middle East
Sandra Sokoloff, Senior Director of Global Public Relations
Alvarez & Marsal