Saudi Arabia Banks

Research evidence excerpt

Saudi Arabia Banks

Equity Research

1 July 2026 | 3:38PM GST

SAUDI ARABIA BANKS

Increase in profitability driven by improving liquidity

Saudi Central Bank Monthly Statistical Bulletin for May-26. Key takeaways: Kazim Andac

+971(4)214-9958 |

kazim.andac@gs.com

We believe May data is moderately positive for the Saudi banks. While loan growth Goldman Sachs International

remained relatively subdued, funding conditions continued to improve as reflected in Ashwath P T, CFA

+971(4)376-3439 | ashwath.pt@gs.com

lower SAIBOR bids and stable deposit trends, supporting a recovery in sector Goldman Sachs International

profitability. Banking sector profit before zakat and tax increased to SR8.8bn in Gokul Vinayak L

May-26 (up 7% mom and 8% yoy) from SR8.2bn in Apr-26. Loan growth remained +1(332)245-7976Goldman Sachs India| gokul.l@gs.comSPL

healthy at 7% yoy, although it continued to lag deposit growth of 9% yoy. On a

monthly basis, loans/deposits grew by 0.5%/0.2%, with the sector LDR broadly

stable at 109%. In terms of loan growth, corporate/retail lending increased by

0.7%/0.2% mom, respectively. Meanwhile, monthly mortgage origination declined to

SR4.4bn in May-26 from SR6.3bn in Apr-26, down 31% mom and 41% yoy,

highlighting continued softness in housing finance activity.

Looking ahead, we expect margin pressures to continue easing given declining

funding costs and improving liquidity conditions. Notably, 2Q26 SAIBOR 3M bids

declined to 4.72% from 4.83% in 1Q26, while banks’ funding costs are starting to

moderate across most names. This should help support profitable growth and

maintain sufficient capital buffers. We believe relief in funding cost and repricing

efforts taken by banks should support NIM resilience. Overall, we expect earnings