- Profitability growth moderated as net income rose 2.8% QoQ, supported by stronger other operating income despite softer operating income growth.
- Loan-to-deposit dynamics remained stable, with lending growth steady but funding expansion easing amid softer deposit mobilization.
- Cost efficiency continued to strengthen as banks enhanced operational discipline for a third consecutive quarter.
Aggregate gross loans and advances increased 2.5 percent quarter-on-quarter (QoQ), maintaining a steady pace of expansion. Corporate lending, which accounts for roughly 59% of total loans, grew 3.0 percent QoQ, while retail lending rose 1.7 percent QoQ, marking an acceleration relative to Q2. Deposit growth moderated to 2.2 percent QoQ, down from 2.7 percent in Q2, led by declines at SNB across both CASA (-2.5% QoQ) and time deposits (-7.9% QoQ). Government-related entity (GRE) deposits saw a minor decline, with their share decreasing to 31.2 percent of total deposits.
Operating income increased by 1.8 percent QoQ, a slight moderation from the 2.0 percent QoQ increase in Q2. Net interest income was broadly flat at +0.1 percent QoQ, while fee and commission income rose 3.8 percent QoQ. Strong gains in other operating income (+12.6 percent QoQ) - notably from SNB (+34.1% QoQ) and
Net interest margin (NIM) contracted by 7bps to 2.73 percent, reflecting continued pressure from rising funding costs. Cost of funds (CoF) increased 22bps QoQ to 3.6 percent, while yield on credit (YoC) rose 17bps QoQ to 8.2 percent, compressing the spread further. Nevertheless, banks demonstrated stronger cost discipline, with operating expenses declining 0.9 percent QoQ, driving the third consecutive quarter of
Return on equity (RoE) edged higher by 6bps to 15.5 percent, while return on assets (RoA) remained steady at 2.1 percent, underscoring sustained sector resilience.
The country's 10 largest listed banks analyzed in A&M's KSA Banking Pulse are
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The prevailing trends identified for Q3 2025 are as follows:
- Net loans and advances grew 2.5% QoQ, supported by 3.0% corporate lending growth and 1.7% retail lending growth.
- Deposits increased 2.2% QoQ, with government deposits representing 31.2% of the total.
- NIM contracted to 2.73%, as funding costs rose 22bps QoQ to 3.6%.
- Cost-to-income ratio improved to 28.7%, marking the third consecutive quarter of efficiency gains.
- Asset quality strengthened, with the NPL ratio declining to 0.94% and coverage ratio rising to 158.1%.
- Net income increased 2.8% QoQ, supported by a sharp rise in other operating income.
- RoE inched up to 15.5%, while RoA held steady at 2.1%.
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OVERVIEW
The table below sets out the key metrics:
CATEGORY | METRIC | Q2 2025 | Q3 2025 |
|---|---|---|---|
Size | Loans and Advances Growth (QoQ) | 2.5% | 2.5% |
Deposits Growth (QoQ)) | 2.7% | 2.2% | |
Liquidity | Loan-to-Deposit Ratio (LDR) | 105.9% | 106.2% |
Income & Operating Efficiency | Operating Income Growth (QoQ) | 2.0% | 1.8% |
Operating Income / Assets | 3.5% | 3.5% | |
Non-Interest Income / Operating Income | 23.8% | 25.2% | |
Yield on Credit (YoC) | 8.0% | 8.2% | |
Cost of Funds (CoF) | 3.4% | 3.6% | |
Net Interest Margin (NIM) | 2.80% | 2.73% | |
Cost-to-Income Ratio ( | 29.5% | 28.7% | |
Risk | Coverage Ratio | 155.9% | 158.1% |
Cost of Risk (CoR) | 0.25% | 0.24% | |
Profitability | Return on Equity (RoE) | 15.4% | 15.5% |
Return on Assets (RoA) | 2.1% | 2.1% | |
Return on Risk-Weighted Assets (RoRWA) | 2.7% | 2.8% | |
Capital | Capital Adequacy Ratio (CAR) | 19.5% | 20% |
Source: Financial statements, investor presentations, A&M analysis
ENDS
Methodology
A&M's KSA Banking Pulse examines data of the 10 largest listed banks in the Kingdom, comparing the Q3 25 results against Q2 25 results. Certain prior-period figures have been restated to align with the methodology applied in this edition. As a result, selected historical ratios may differ from those published previously, and have been updated to ensure consistency and comparability.
The report uses independently sourced published market data and 16 different metrics, to assess 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
Originally published on
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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