Banking sector report
The ten listed Saudi banks recorded profits of SAR 73.6 billion in the first nine months of 2026, up 6.8%. But assessing banking performance requires looking beyond profit growth to its sources, operating efficiency, credit risk costs, and liquidity. A new report from “Yamama Insights” analyzes these indicators based on the banks’ official disclosures.
SAR 73.6 billion… How were the profits generated?
The ten listed Saudi banks recorded net profits of SAR 73.6 billion in the nine months ended September 30, 2026, up 6.8% from the same period a year earlier. Operating income grew at roughly the same rate, reaching SAR 125.8 billion.
Quarterly results, however, tell a slightly different story: profit growth slowed to 4.8% year over year in the third quarter, with a slight decline of 0.5% compared with the second quarter.
The results show a notable concentration of profits: Al Rajhi Bank and Saudi National Bank together accounted for 54.8% of the ten banks’ total profits, while Al Rajhi alone contributed around 52.1% of the sector’s year-on-year profit increase.
What drove profit growth?
An analysis of profitability sources shows that net commission income rose by about SAR 8.3 billion, while the final increase in net profit was SAR 4.7 billion.
This means that some of the increase in income was absorbed by operating expenses and provisions, as well as declines in non-financing income and other items.
Net commission income is the difference between the income banks earn from financing and investments and the costs they incur on deposits and other funding sources.
The report also points to a 1.2% decline in non-financing income, bringing net commission income’s share of total operating income to 77.8%. This reflects the importance of financing and investment activities to bank profitability.
Profits are growing… What about risk?
Banks’ operating efficiency improved, with the cost-to-income ratio falling from 29.3% to 29%. This means banks now spend, on average, around 29 halalas on operations for every riyal of operating income.
In contrast, the cost of credit risk rose from 0.25% to 0.27%.
This ratio matters because it measures the cost of provisions associated with financing risks. Provisions are accounting amounts banks recognize in preparation for potential credit losses; they do not necessarily mean that actual defaults will occur in the same amount.
The report notes that the cost of risk in the third quarter alone was 0.36% on an annualized basis, compared with an average of 0.27% for the nine-month period. This warrants monitoring the trend in provisions over the coming periods.
Financing is growing faster than deposits
The financing-to-customer-deposits ratio rose to 107%, compared with around 105.4% a year earlier.
This means that the amount of financing provided to customers exceeds the value of customer deposits held by the banks, and that some financing relies on other sources, such as sukuk issuance and borrowing.
This ratio alone does not indicate a liquidity problem, but it is an important measure for understanding the funding structure and its cost.
Profits alone do not tell the whole story
One notable finding discussed in the report is a negative gap of SAR 7.4 billion between total comprehensive income and net profit in the third quarter, equivalent to around 30% of quarterly profits.
This gap is linked to accounting items that may include changes in the fair value of certain investments and hedging activities. These are reflected in equity without necessarily passing through net profit.
For this reason, a bank’s profitability cannot be fully assessed by looking at the income statement alone.
A deeper look at Saudi banks’ performance
The report “Saudi Banking Sector Performance – Nine Months of 2026,” published by Yamama Insights on October 25, 2026, provides a comparative analysis of the performance of the ten listed banks, covering profitability, operating efficiency, income quality, risk, liquidity, and return on capital.
The report draws on preliminary financial results published on Saudi Exchange (Tadawul), and calculates a set of analytical indicators using a methodology outlined in the report.
The takeaway is that profit growth is an important indicator, but it is not enough on its own to assess banking performance. The question is not just how much banks earn, but how they generate those profits, how sustainable they are, and what risks accompany them.
See the attached full report to learn about each bank’s performance and compare its indicators with those of the rest of the sector.
Report preparation team
Hamad Alsaeed
Financial and Economic Analyst
Dalal Bin Khudair
Administrative Organization Specialist
@dalal BinKhudair
Alroutana Albadri
Administrative Assistant
Publisher: Yamama Insights.
Report date: October 25, 2026.
Sources: Preliminary financial results announcements from the ten banks listed on Saudi Exchange, and the analyst’s calculations.
Disclaimer: This report was prepared for educational and informational purposes and does not constitute an investment recommendation. The analytical indicators are based on the report’s methodology and may differ from the indicators reported by the banks.
