How Saudi banks’ solid risk management counters liquidity pressures 

How Saudi banks’ solid risk management counters liquidity pressures 
Banks are reducing lending rates to stay competitive while maintaining attractive deposit rates to secure funding, according to Fitch Ratings. Shutterstock
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Updated 18 March 2025
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How Saudi banks’ solid risk management counters liquidity pressures 

How Saudi banks’ solid risk management counters liquidity pressures 
  • Banks maintained profitability despite rising funding costs, fueled by intensified deposit competition and increased reliance on external borrowing
  • Alvarez & Marsal highlighted strong credit quality as a key factor supporting profitability in 2024

RIYADH: Saudi Arabia’s banking sector demonstrated resilience in 2024, supported by strong asset quality, improved cost efficiency, and disciplined credit management, according to Alvarez & Marsal. 

Arab News analysis of the A&M KSA Banking Pulse 2024 report found that banks maintained profitability despite rising funding costs, fueled by intensified deposit competition and increased reliance on external borrowing. 

This assessment relies on key financial ratios outlined in the report, including cost-to-income and loan-to-deposit, as well as net interest margin — indicators of how banks are navigating cost structures, liquidity pressures, and profitability. 

The A&M report came alongside a separate analysis from Fitch Ratings, which suggests that lower interest rates have had a mixed impact on earnings by banks in the Kingdom.




As Saudi Arabia accelerates economic diversification, the banking sector remains a key pillar of Vision 2030. Shutterstock

“Saudi banks’ performance metrics, particularly net interest margins, will see only limited improvement from the interest rate cuts that began in 2024, due to the prolonged tightening of liquidity conditions and strong competition for funding,” the agency said.

While rate cuts support loan growth, which boosts income from higher credit volumes, intense competition for liquidity is squeezing margins. Banks are reducing lending rates to stay competitive while maintaining attractive deposit rates to secure funding. 

Strong asset quality 

Alvarez & Marsal highlighted strong credit quality as a key factor supporting profitability in 2024. 

The non-performing loan ratio improved by 18 basis points to 1.1 percent, reflecting better risk management and healthier loan portfolios. Meanwhile, loan loss coverage remained solid at 161 percent, ensuring a strong buffer against defaults. The cost of risk also improved to 0.3 percent, indicating lower impairments and higher-quality lending. 

These improvements directly boosted bank earnings. Lower impairment charges allowed banks to retain more profits rather than setting aside funds for bad loans. 

With a larger share of performing loans and reduced provisioning costs, banks strengthened their bottom lines despite margin pressures.   

As Saudi Arabia accelerates economic diversification, the banking sector remains a key pillar of Vision 2030, driving financing for mega-projects, corporate expansion, and capital market growth. Banks are at the forefront of private sector investment, reinforcing their role as vital enablers of the Kingdom’s transformation. 

Beyond traditional lending, Saudi banks play a pivotal role in capital markets, contributing significantly to liquidity and investment activity. Banking stocks are among the most actively traded on the Saudi Stock Exchange, often driving market turnover. 

Saudi banks are also expanding their footprint in the debt market, with sukuk issuances and other financial instruments increasingly funding large-scale projects. 




Deposits rebounded by SR40 billion in January, fully offsetting the fourth-quarter drop. Shutterstock

Efficiency gains drive profitability 

Saudi banks demonstrated strong cost management in 2024, according to A&M, optimizing operational expenses while maintaining revenue growth. 

This resulted in a 63 basis point improvement in the cost-to-income ratio, which fell to 31.3 percent, reflecting greater efficiency in generating income relative to costs.  

The improvement reflects banks’ strategic focus on digital transformation, automation, and expense management — ensuring sustainable, long-term growth despite rising funding costs and liquidity pressures. 

Cost optimization efforts contributed to a 9.3 percent year-on-year growth in operating income, outpacing the 7.1 percent rise in operating expenses. This operational discipline boosted profitability, leading to a 13.5 percent rise in aggregate net income, reaching SR79.6 billion in 2024. 

Key contributors to this annual growth included a SR7.9 billion increase in net interest income, SR2.6 billion in net fee and commission income, and SR1.6 billion in other operating income, according to the report. 

However, net interest income growth slowed to 7.6 percent year-on-year in 2024, down from 11 percent in 2023, primarily due to higher funding costs.  

Despite narrowing net interest margins, banks leveraged rising fee-based income and cost efficiencies, maintaining a stable earnings outlook. The sector’s ability to navigate tightening liquidity while staying profitable underscores its strategic adaptability. 

Rising funding costs  

The rise in funding costs for Saudi banks is driven by both local liquidity constraints and global financial trends. As deposit growth lags behind credit expansion, banks are increasingly turning to alternative funding sources to sustain lending activity. 

A key factor behind this deposit gap is the dominance of government-related entity deposits, which account for about one-third of total sector deposits, according to Fitch Ratings. 

During the high-interest rate cycle, GREs moved funds into banks offering higher returns, rather than holding them at the Saudi Central Bank, also known as SAMA. 




Saudi banks play a pivotal role in capital markets, contributing significantly to liquidity and investment activity. Shutterstock

The introduction of SAMA’s deposit auction platform accelerated this shift, with GRE deposits at the central bank dropping from SR670 billion in 2023 to SR460 billion in early 2025. 

However, as rates began to decline, GRE inflows slowed. In the fourth quarter of 2024, Saudi banks saw a rare SR27 billion — or 1 percent — decline in deposits, the first drop since 2019, according to Fitch Ratings. The agency attributed this to seasonal budget and tax-related outflows from GREs.  

Despite this, deposits rebounded by SR40 billion in January, fully offsetting the fourth-quarter drop. 

While deposits recovered, their growth lagged behind lending expansion, which surged 14.4 percent year on year in 2024 — significantly outpacing the 7.9 percent rise in deposits, according to the A&M report. 

This pushed the loan-to-deposit ratio to 104.7 percent, surpassing the 100 percent mark for the first time in recent years.  

Corporate lending remains the primary driver, fueled by Vision 2030 mega-projects, infrastructure development, and private sector investments. 

With rising corporate financing needs, banks have diversified their funding sources, leaning more on sukuk issuances, external borrowings, and interbank lending to bridge liquidity gaps. While essential, these instruments come with higher costs than traditional deposits, pushing funding expenses higher.   

Impact of monetary policy  

The monetary policy shift has contributed to liquidity pressures. The US Federal Reserve’s 100 basis point rate cut in 2024 prompted SAMA to lower its repo rate to 5 percent, aligning with the riyal’s dollar peg. 

Despite this easing, funding costs remain high due to a lag effect — banks are still carrying higher-cost deposits and debt issued during the peak rate period. 

With loan growth projected to outpace deposits in 2025, Fitch forecasts banks will increase non-deposit funding, with debt issuance expected to exceed $20 billion. However, competition for liquidity and the dilution of current and savings accounts may offset the benefits of lower rates on net interest margins. Banks will need to carefully manage their funding mix to sustain profitability. 

Fitch also warned that tightening liquidity and increased reliance on external funding could pressure some banks’ funding and liquidity scores. However, a one-notch downgrade is unlikely to affect their overall Viability Ratings. 

As Saudi banks navigate these challenges, they are expected to focus on optimizing funding strategies, expanding capital market access, and leveraging long-term debt instruments to fuel lending growth while controlling funding costs.


Saudi Arabia launches global platform to shape future of tourism 

Saudi Arabia launches global platform to shape future of tourism 
Updated 58 sec ago
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Saudi Arabia launches global platform to shape future of tourism 

Saudi Arabia launches global platform to shape future of tourism 

RIYADH: Saudi Arabia has launched TOURISE, a global platform connecting leaders in tourism, tech, investment, and sustainability, as it positions itself to shape future travel policy and innovation. 

The platform, officially introduced by Minister of Tourism Ahmed Al-Khateeb, will serve as a year-round initiative to unlock investment opportunities, address sector-wide challenges, and develop policies to guide the next phase of global tourism growth.  

The launch aligns with Saudi Arabia’s broader push to become a global tourism hub, backed by major infrastructure investments, streamlined visas, and high-profile events. In 2024, Saudi Arabia hit its Vision 2030 target of 100 million visitors — seven years early — with tourism now contributing nearly 5 percent to gross domestic product. 

Speaking during the virtual launch, Al-Khateeb said: “Tourism is one of the most dynamic, connective forces in the world’s economy, supporting one in ten jobs globally. But as the world evolves, the sector must too.”  

He added: “Whether adapting to technological disruption and changing traveler expectations, to addressing the urgent calls for sustainability and a more equitable approach to travel, TOURISE will be the much-needed platform to shape the future of tourism.”  

TOURISE will be supported by an advisory board composed of global figures from the tourism, hospitality, and technology, as well as entertainment and investment sectors. 

According to the official press release, TOURISE will also form working groups focused on key themes and will publish white papers and global indices in collaboration with international organizations. 

The first TOURISE Summit will take place in Riyadh from Nov. 11-13. The event will explore four major areas: the role of artificial intelligence in tourism, investment and business model innovation, travel experience upgrades, and inclusive and sustainable tourism practices.  

An Innovation Zone will spotlight emerging technologies from both public and private sector firms. 

An accompanying awards program will recognize destinations and organizations that demonstrate leadership in categories such as sustainability, digital transformation, cultural preservation, inclusive tourism and workforce development.  

Nominations for the awards are scheduled to open on June 2, with winners to be announced on the summit's opening day. 

“For this industry to evolve and reach its full potential, public-private sector collaboration is critical to the continued success of Travel & Tourism worldwide,” said Julia Simpson, president and CEO of the World Travel & Tourism Council and a member of the TOURISE advisory board.  


Egypt central bank cuts key interest rates by 100 basis points, statement says

Egypt central bank cuts key interest rates by 100 basis points, statement says
Updated 18 min 16 sec ago
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Egypt central bank cuts key interest rates by 100 basis points, statement says

Egypt central bank cuts key interest rates by 100 basis points, statement says

CAIRO: Egypt’s central bank lowered its key interest rates by 100 basis points on Thursday, its second rate cut in 2025 after keeping rates unchanged for a year.


Closing Bell: Saudi main index ends lower at 11,188

Closing Bell: Saudi main index ends lower at 11,188
Updated 22 May 2025
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Closing Bell: Saudi main index ends lower at 11,188

Closing Bell: Saudi main index ends lower at 11,188
  • MSCI Tadawul 30 Index lost 12.2 points to close at 1,428.81
  • Parallel market Nomu declined by 156.89 points to end at 27,260.73

RIYADH: Saudi Arabia’s Tadawul All Share Index closed in the red on Thursday, falling 114.94 points, or 1.02 percent, to settle at 11,188.74.

The total trading turnover reached SR4.4 billion ($1.17 billion), with 76 stocks advancing and 165 declining.

The MSCI Tadawul 30 Index also dropped, losing 12.2 points, or 0.85 percent, to close at 1,428.81.

The Kingdom’s parallel market Nomu declined by 156.89 points, or 0.57 percent, to close at 27,260.73, with 29 stocks gaining and 49 retreating.

The best-performing stock of the day was Saudi Reinsurance Co., rising 3.70 percent to SR49.

Other top gainers included Al-Rajhi Company for Cooperative Insurance, whose share price rose 3.65 percent to SR119.2, and Umm Al-Qura Cement Co., which gained 3.42 percent to SR17.54.

The day’s largest decline was seen in SHL Finance Co., with its share price dipping 4.93 percent to SR19.30.

Al-Etihad Cooperative Insurance Co. saw its shares drop 3.86 percent to SR13.44, while Saudi Arabian Oil Co. declined 3.64 percent to SR25.15.

The best performer on the Kingdom’s parallel market was Enma AlRawabi Co., with its share price surging by 7.77 percent to reach SR24.98.

Lamasat Co.’s share price increased by 7.58 percent to reach SR7.1, and Natural Gas Distribution Co. reached SR47, increasing by 6.82 percent.

Albattal Factory for Chemical Industries Co. was the worst performer on the parallel market, declining 16.83 percent to reach SR42.


Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 

Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 
Updated 22 May 2025
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Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 

Aramco, stc drive Saudi brands’ value up 14% to $117bn, new report shows 
  • Energy, banking, and telecommunications represent nearly 74% of the total brand value in the rankings
  • Dairy producer Almarai is recognized as the Kingdom’s third strongest brand

RIYADH: Saudi Arabia’s top 100 brands reached a combined valuation of $116.8 billion as of January, up 14 percent year on year, led by energy giant Aramco and telecom operator stc, according to a new report.

Marketing consultancy firm Brand Finance said Aramco retained its position as the Kingdom’s most valuable brand for the sixth consecutive year, with a valuation of $41.7 billion.

The company’s strength stems from its global oil production capabilities and investments in low-carbon technologies. 

Aramco retained its position as the Kingdom’s most valuable brand for the sixth consecutive year. Shutterstock

The Kingdom’s economy remains heavily influenced by its core sectors — energy, banking, and telecommunications — which together represent nearly 74 percent of the total brand value in the rankings. This sector concentration underscores Saudi Arabia’s ongoing economic diversification efforts as part of its Vision 2030 strategy. 

Andrew Campbell, managing director, Brand Finance Middle East, said: “Saudi Arabia’s brand landscape is evolving at an impressive pace, driven by bold strategies, innovation, and a clear vision for the future.” 

He added: “From long-standing powerhouses like Aramco and stc to fast-rising brands like Saudia and Almarai, there’s a real sense of momentum across sectors. These brands are not only contributing to the Kingdom’s economic transformation but also setting new benchmarks for excellence in the region and beyond.” 

The report further revealed that stc ranked as the Kingdom’s second most valuable brand in 2025, with a valuation of $41.7 billion, up 16 percent year on year. 

This growth is primarily linked to the successful implementation of its Masterbrand strategy, which facilitated expansion into sectors like banking, cybersecurity, B2B, and IT services through strategic mergers and acquisitions. 

stc ranked as the strongest brand in Saudi Arabia, earning a Brand Strength Index score of 88.7 out of 100 and an AAA rating. File/Reuters

The report by the London-based brand valuation consultancy showed that stc is also ranked as the strongest brand in Saudi Arabia, earning a Brand Strength Index score of 88.7 out of 100 and an AAA rating. Its continued investment in 5G infrastructure and digital financial services has solidified its position as a telecom leader. 

An AAA rating is the highest possible credit or brand strength rating, indicating robust reliability, quality, and performance. 

With brand value up 20 percent to $4.7 billion, Dairy producer Almarai is recognized as the Kingdom’s third strongest brand, earning a Brand Strength Index score of 85.5 out of 100 and an AAA brand strength rating. 

Almarai is also ranked as the top brand in Saudi Arabia for environmental, social, and governance performance. Almarai

This follows the brand’s collaboration with Google Cloud, launched in November, which is driving its digital transformation and enhancing operational efficiency. 

Almarai is also ranked as the top brand in Saudi Arabia for environmental, social, and governance performance, underscoring its strong commitment to ethical business practices, sustainable farming, and reducing carbon emissions. 

As for Saudia, its brand value surged by 34 percent to reach $1.1 billion in January, making it the fastest-growing Saudi brand and marking its first time crossing the billion-dollar milestone. 

Saudia’s brand value surged by 34 percent to reach $1.1 billion in January. Wikipedia

This achievement is largely attributed to the airline’s bold rebranding, along with advances in AI-driven customer service and infrastructure upgrades, which have significantly boosted its global brand visibility. 

The report further revealed that ROSHN Group, with a brand value of $1.1 billion, is the highest-ranked new entrant in the Kingdom this year. It also became the most valuable real estate brand in the country and secured a place among the top 20 brands overall. This debut reflects the company’s strong financial performance and ambitious expansion strategy. 

“Saudi Arabia’s brand landscape is evolving at an impressive pace, driven by bold strategies, innovation, and a clear vision for the future. It’s particularly exciting to see new entrants like ROSHN Group make such a strong debut, showing that diversification and ambition are paying off,” Campbell added. 


Saudi Arabia doubles funding to Union of Arab Chambers

Saudi Arabia doubles funding to Union of Arab Chambers
Updated 22 May 2025
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Saudi Arabia doubles funding to Union of Arab Chambers

Saudi Arabia doubles funding to Union of Arab Chambers
  • Expanded support will significantly enhance UAC’s capacity to deliver programs and initiatives empowering the Arab private sector
  • FSC and UAC are working to boost intra-Arab trade and expand access to third markets

JEDDAH: Saudi Arabia has doubled its financial contribution to the Union of Arab Chambers, a decisive move aimed at reinforcing regional economic integration and boosting private sector cooperation across the Arab world.

The Federation of Saudi Chambers announced the increase on Tuesday, stating that the expanded support will significantly enhance the UAC’s capacity to deliver programs and initiatives that empower the Arab private sector and foster closer economic ties among member states.

The decision underscores the Kingdom’s growing leadership role in regional economic affairs and comes at a time when calls for deeper intra-Arab collaboration are intensifying. A 2023 report from the UN Economic and Social Commission for Western Asia warned of declining exports and over-reliance on limited markets, urging Arab countries to diversify and strengthen intra-regional trade.

Despite shared economic interests, intra-Arab trade made up just 13.8 percent of the region’s total foreign trade by late 2024—a figure FSC President Moejeb Al-Hwaizy described as “modest” in comparison to other global economic blocs. Al-Hwaizy was elected first vice president of the UAC during its 135th session in Qatar.

The FSC noted that Saudi Arabia’s enhanced contribution reflects its “strategic responsibility” as the UAC’s largest financial backer and soon-to-be president. “This is an extension of the federation’s role in supporting the private sector at the local, regional, and international levels,” it said.

The Kingdom’s leadership in the UAC, founded in 1951 and comprising chambers from all Arab League member states, highlights its broader ambition to promote joint Arab economic action, unlock cross-border investment, and facilitate closer coordination among private sector leaders.

With several joint initiatives already underway, the FSC and UAC are working to boost intra-Arab trade and expand access to third markets through business partnerships and strategic cooperation.

As the only Arab country in the G20 and the region’s largest economy, Saudi Arabia’s growing influence in Arab economic institutions signals its continued commitment to fostering unity and resilience in a rapidly evolving global trade environment.