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Deposits, Loans Raise Saudi Banks’ Profits in 3rd Quarter

Saudi banks register high profitability in the third quarter of 2023. (SPA)
Saudi banks register high profitability in the third quarter of 2023. (SPA)
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Deposits, Loans Raise Saudi Banks’ Profits in 3rd Quarter

Saudi banks register high profitability in the third quarter of 2023. (SPA)
Saudi banks register high profitability in the third quarter of 2023. (SPA)

Saudi banks achieved SAR 18 billion ($4.8 billion) in profits at the end of the third quarter of 2023 - the highest quarterly profits in their history - due to the rise in interest rates and the increase in the volume of deposits and the diversification of the products they offer to their customers.

The profitability of Saudi banks increased by SAR 1.5 billion over the same quarter in 2022, maintaining profit growth for the third quarter in a row, according to the financial results announced on the Saudi Stock Exchange (Tadawul).

The net profits of the 10 banks listed on the Saudi stock market during the third quarter of 2023 amounted to about SAR 18.08 billion, compared to SAR 16.61 billion the same quarter in 2022.

In remarks to Asharq Al-Awsat, Dr. Mohammed Makni, General Manager of Ithmar Development Company and Assistant Professor of Finance and Investment at Imam Mohammad bin Saud University in Saudi Arabia, said the banking sector was a key component in the Saudi national economy and a partner in achieving the Saudi Vision 2030 programs.

Makni pointed to the high confidence in Saudi banks, adding that the growth in the volume of deposits has helped banks increase their profitability over the past three quarters, which positively impacts the growth of the Saudi economy’s domestic product, and confirms the good planning of Saudi banks in choosing qualitative investments.

Total deposits in Saudi banks exceeded SAR 2.5 trillion, the highest in the Kingdom’s history, while loans amounted to about SAR 2.4-2.5 trillion.

Financial markets analyst Abdullah Al-Kathiri told Asharq Al-Awsat that the rise in banks’ profitability was due to the growth in the size of deposits, which allowed the banks to increase the loans granted to individuals and establishments.

He added that banks were able to maintain lending operations and increase profit margins, especially with the continuing rise in interest rates, noting that the economic expansion and diversification that Saudi Arabia is witnessing in conjunction with the implementation of Vision 2030 has improved the volume of companies’ demand for loans during the past quarters.

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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo

US job growth accelerated in September and the unemployment slipped to 4.1%, further reducing the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls rising by 140,000 positions after advancing by a previously reported 142,000 in August.
The initial payrolls count for August has typically been revised higher over the past decade. Estimates for September's job gains ranged from 70,000 to 220,000.
The US labor market slowdown is being driven by tepid hiring against the backdrop of increased labor supply stemming mostly from a rise in immigration. Layoffs have remained low, which is underpinning the economy through solid consumer spending.
Average hourly earnings rose 0.4% after gaining 0.5% in August. Wages increased 4% year-on-year after climbing 3.9% in August.
The US unemployment rate dropped from 4.2% in August. It has jumped from 3.4% in April 2023, in part boosted by the 16-24 age cohort and rise in temporary layoffs during the annual automobile plant shutdowns in July.
The US Federal Reserve's policy setting committee kicked off its policy easing cycle with an unusually large half-percentage-point rate cut last month and Fed Chair Jerome Powell emphasized growing concerns over the health of the labor market.
While the labor market has taken a step back, annual benchmark revisions to national accounts data last week showed the economy in a much better shape than previously estimated, with upgrades to growth, income, savings and corporate profits.
This improved economic backdrop was acknowledged by Powell this week when he pushed back against investors' expectations for another half-percentage-point rate cut in November, saying “this is not a committee that feels like it is in a hurry to cut rates quickly.”
The Fed hiked rates by 525 basis points in 2022 and 2023, and delivered its first rate cut since 2020 last month. Its policy rate is currently set in the 4.75%-5.00% band.
Early on Friday, financial markets saw a roughly 71.5% chance of a quarter-point rate reduction in November, CME's FedWatch tool showed. The odds of a 50 basis points cut were around 28.5%.