RIYADH: Companies listed on Saudi Arabia’s Tadawul All Share Index, or TASI, regained strong earnings momentum during the first quarter of this year, defying geopolitical tensions in the region, to record their highest quarterly profits since mid-2022, surpassing the weak performance seen in the final quarter of the previous year.
First-quarter profits grew by about 14.4 percent, reaching SR46.5 billion ($12.4 billion). Including Saudi Aramco’s results, total earnings rose to SR166.6 billion, up 22 percent.
The conflict in the Middle East boosted the performance of several Saudi companies, most notably Saudi Aramco, whose quarterly profits rose by about 26 percent, driven by higher oil prices and increased volumes sold, as well as petrochemical companies, particularly those located on the Red Sea coast.
Bahri also emerged as one of the biggest beneficiaries, posting record profits after tripling its earnings, supported by rising global oil shipping rates.
Healthcare and insurance emerge as key sectors
Contrary to the usual trend, the healthcare sector’s profits declined by about 38 percent, marking its first quarterly contraction in more than five years.
The drop comes as companies continue their expansion plans, which have weighed on profit margins, leaving sector earnings at SR1.1 billion, the lowest level in nine quarters.
Dr. Sulaiman Al-Habib Medical Services Group, the region’s largest healthcare provider, saw profits decline by about 10 percent, while Dallah Healthcare Co’s profits dropped by about 46 percent due to the absence of one-off gains recorded in the same period last year.
In contrast, the insurance sector rebounded strongly, with profits growing by 40 percent to reach SR980 million, marking the first profit growth after five consecutive quarters of decline.
The rebound was driven by growth in insurance premiums, improved loss ratios, particularly among large and mid-sized companies, as well as stronger investment returns.
Banks record slowest growth in 9 quarters
Saudi banks recorded their slowest profit growth in nine quarters amid continued slowing loan portfolio growth, despite support from lower provisioning costs.
Profits rose by 7.6 percent year-on-year to SR23.95 billion, and by 1.3 percent compared with the previous quarter, allowing banks to continue posting record profits for the ninth consecutive time. However, results came in about 3 percent above expectations.
Al Rajhi Bank led profit growth in the first quarter, posting a 14.3 percent increase, although this marked its lowest growth rate in around two years. Bank Aljazira and Alinma Bank also reported growth of more than 10 percent.
Other banks recorded growth ranging between 3.2 percent and 6.7 percent, including SNB, Riyad Bank, and Bank Albilad, as well as Banque Saudi Fransi, or BSF.
In contrast, profits of Saudi Awwal Bank fell by about 2.3 percent, making it the only bank to record a decline, amid pressure from higher credit loss provisions and a 1 percent drop in net special commission income due to rising commission expenses, particularly those linked to an increase in interest-bearing term deposits.
Meanwhile, banks increased cash dividends for fiscal year 2025 by 2 percent to SR41.7 billion, benefiting from record profits of around SR92.5 billion.
Despite this increase in total payouts, banks showed a more conservative dividend payout ratio, with distributions accounting for 45 percent of profits, compared to historical levels of at least 50 percent.
This reflects the sector’s strategy of retaining a larger share of earnings to strengthen capital bases and meet major financing requirements, particularly those linked to Saudi Vision 2030 projects.
Bahri and Petro Rabigh enter the list of most profitable firms
The sharp rise in Bahri’s profits and Petro Rabigh’s return to profitability at record levels enabled both companies to enter the list of top profitable firms.
Bahri, whose profits tripled due to a sharp increase in global shipping rates and disruptions in shipping routes, recorded record earnings of SR2.15 billion, placing it sixth among listed companies, ahead of leading banks.
Petro Rabigh ranked 10th with profits of SR1.5 billion, compared with a loss of SR691 million in the same period last year, supported by improved product prices following supply disruptions.
At the same time, Saudi Aramco maintained its dominance as the most profitable company in the market, posting SR120.1 billion in earnings, up about 26 percent.
Saudi Kayan topped the list of loss-making companies with a net loss of SR614.6 million, despite reducing losses by 20.7 percent.
Other loss-making firms included Saudi Energy with losses of SR403 million, as well as Emaar, Tasnee, and Sipchem, while more than 45 listed companies reported net losses during the period.
