Saudi Arabia’s banking sector maintained its strong performance in recent years, posting another set of record results as the 10 banks listed on the Saudi stock market reported a combined net profit of $6.63 billion (24.87 billion riyals) in the second quarter of 2026.
The figure marked annual growth of 12.5%, an increase of $738 million (2.77 billion riyals) from the same period in 2025.
The performance was driven by higher financing and investment income and improved operating revenue across the 10 lenders: Saudi National Bank, Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad, Saudi Investment Bank and Bank AlJazira.
Al Rajhi Bank retained its position as Saudi Arabia’s most profitable lender in the second quarter of 2026, reporting net profit of 7.01 billion riyals, up 14% from about 6.15 billion riyals a year earlier.
Operating income
Al Rajhi’s performance was supported by a 13.3% increase in total operating income, along with growth in net financing and investment income, banking service fees and foreign exchange income.
Saudi National Bank ranked second, with a net profit of 6.61 billion riyals, up 7.64% from 6.14 billion riyals in the second quarter of 2025.
The bank attributed the increase to an 11.3% rise in total operating income to 10.6 billion riyals, driven by higher net financing and investment income and stronger net foreign exchange income.
Riyad Bank came third, reporting a profit of nearly 2.65 billion riyals, up 2.02% from 2.60 billion riyals a year earlier.
The bank attributed the increase to higher net income, total operating income, net special commission income and dividend income.
Those gains were partly offset by declines in net fee and commission income, net gains from the sale of non-trading investments, other operating revenue and net foreign exchange income.
Operating efficiency
Financial and economic expert Suleiman Al-Hamid Al-Khalidi, a member of the Saudi Economic Association, said Saudi banks delivered record results and a strong performance in the second quarter, supported by domestic economic activity.
The results reflected the strength of the local economy despite the geopolitical crisis in the region, continued growth in financing and credit, improved operating efficiency and stronger asset quality, Al-Khalidi told Asharq Al-Awsat.
He said the main drivers included continued growth in retail and corporate financing portfolios, supported by Vision 2030 projects, and higher special commission income as interest rates remained at levels that supported profit margins.
Banks also benefited from rising non-financing revenue, particularly from fees, banking services and wealth management, he said.
A relative decline in the cost of risk, improving credit portfolio quality, stable default rates and strong capital and financial positions also strengthened banks’ ability to expand and achieve sustainable growth, Al-Khalidi added.
He expects the banking sector to maintain its positive performance in the second half of the year, with annual profit exceeding 98 billion riyals.
Al-Khalidi described Al Rajhi Bank’s quarterly profit of more than 7 billion riyals as “very strong” and said the lender was likely to continue growing, supported by government spending, major projects and rising demand for financing from companies and individuals.
Profit growth could moderate if interest rates begin to fall, putting pressure on margins, he said. However, the strength of the Saudi economy and the diversity of banks’ revenue sources make the sector one of the most resilient and profitable on the Saudi stock market.
He said the sector could deliver its strongest annual results on record, with combined profit potentially approaching 100 billion riyals.
Economic shifts
Mohammed Hamdi Omar, an economic analyst and chief executive of G World Studies, said the second-quarter results reflected the strength of Saudi banks’ financial positions and their ability to adapt to economic changes.
Combined profit exceeded many forecasts, showing that the sector’s profitability was underpinned by solid financial and operating drivers rather than temporary factors, Omar told Asharq Al-Awsat.
Banks continued to benefit from wider profit margins as interest rates remained elevated, providing a significant boost to net special commission and financing income, he said.
Corporate credit also maintained strong momentum.
Despite a relative slowdown in some areas of retail lending, including mortgage financing, banks offset the shortfall with a significant expansion in corporate financing, Omar said.
That growth was mainly driven by strong demand for credit to fund major projects and infrastructure developments linked to Vision 2030.
The results also showed that banks had successfully diversified their operating revenue beyond traditional interest income, with strong growth in banking service fees, foreign exchange income and investment returns, he said.
Corporate financing
Omar said effective risk management also played an important role, with asset quality proving critical to the results.
Some banks maintained healthy credit portfolios and reduced credit-loss provisions, allowing a larger share of operating profit to flow directly into net income for shareholders, he said.
Omar expects the sector to enter a period of tactical adjustments in the second half of the year and beyond as banks adapt to the broader economic environment.
With central banks expected to move towards interest rate cuts, profit margins could narrow slightly and gradually, he said.
However, lower borrowing costs could provide a strong boost to demand for consumer loans and mortgage financing, while corporate financing is expected to remain the main strategic driver of growth in banking assets.
As more development projects enter advanced stages of implementation, demand for credit facilities, syndicated financing and bond funding is expected to rise, Omar said.
Investment in technology will also be essential for banks seeking to control costs and maintain high profitability in a lower-rate environment.
Banks are therefore expected to accelerate their digital transformation and expand the use of artificial intelligence and regulatory technology, or RegTech, to improve operating efficiency and reduce costs.
Omar said non-performing loan ratios were likely to remain low by global standards, supported by steady growth in non-oil gross domestic product and the Saudi Central Bank’s proactive prudential policies.
