The Banking Executive Magazine - February 2025 Issue

A New Era for Gulf Economies Saudi Banks OPTIMISTIC ON LOAN GROWTH; LIMITED FINANCIAL STRESS IN 2025 Most banks in Saudi Arabia expect low double-digit to mid-teens growth in 2025, driven by corporate and mortgage lending. Banks believe that their net interest margin (NIM) sensitivity has now re- duced and expect minimal impact from rate cuts. At the same time, they remain opti- mistic on the quality of loans and forecast limited financial stress, as their cost-of-risk guidance stays broadly in line with 2024, the bro- kerage said. The Saudi banking sector’s net profits grew by 21% year-on-year (YoY) and were 4% above consensus in the fourth quarter of 2024. Retail banks such as Al Rajhi Bank, Saudi National Bank, Bank Albilad posted a beat of 8%, while corporate banks reported a miss of 2% on con- sensus. Overall, the net income of the bank- ing sector in 2024 grew by 14%, supported by loan growth of more than 14% and support from non-fi- nance income, which grew by al- most 16% YoY amid a focus on cross-selling and leveraging growth from subsidiaries. Expected credit loss provisions were lower, especially for corporate banks, supporting bottom-line growth, the brokerage noted. ISSUE 194 FEBRUARY 2025 the BANKING EXECUTIVE 21