Saudi banks recorded the highest annual profits in their history after reaching 69.9 billion riyals, benefiting from the growth in financing commission income in particular, in addition to investment commissions and support from the decline in allocations.
According to a report by the Financial Analysis Unit in Al-Eqtisadiah, based on banks’ financial statements, the profits achieved are mainly due to high interest rates. Despite this, profit growth has slowed significantly from 28.4% during 2022 to 11.8%, affected by two important factors, the growth of credit and deposits.
The financing portfolio of Saudi banks recorded a growth of less than 11%, which is the lowest rate in at least three years, as it was clearly affected by the decline in residential lending to individuals. However, corporate financing was the first supporter of growth this year as banks benefited from passing on high interest rates on their loans.
The limited deposit growth this year of 7.8% also contributed to the pressure on financing growth, with the ratio of total deposits to total loans remaining above 100%, which is one of the tools for measuring liquidity.
“First and Enmaa” has the highest growth in 2023
Alawwal Bank recorded the highest growth rate among Saudi banks at 44%, followed by Alinma Bank at 34.5%, while Al Rajhi Bank and Al Jazira Bank recorded a decline in profits.
Al Rajhi Bank’s profits declined last year by more than 3%, marking the first decline in profits in five years, clearly contributing to the slowdown in banks’ profitability, as the bank was affected by its heavy focus on the retail sector and its failure to benefit from high interest rates, thus affecting the margin of net financing commission income.
The National Bank and Al Rajhi Bank each contributed about 52% of the banks’ profits during the past year, as the National Bank recorded the highest net profit in its history at 20 billion riyals, while the National Bank recorded 16.6 billion riyals.
While Bank Al Jazira was the least profitable bank at one billion riyals, followed by the Saudi Investment Bank, which achieved profits amounting to 1.8 billion riyals.
Financial analysis unit
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