Ten Saudi banks listed on the Saudi Exchange announced their preliminary financial results for the period ended September 30, 2026, revealing developments in the banking sector’s performance during the first nine months of the year amid economic changes and intensifying market competition.

The results underscore the importance of assessing financial performance from several perspectives, including net profit growth, funding costs, operating efficiency, asset quality, and banks’ ability to diversify their income sources. Higher profits do not necessarily mean that all operating indicators have improved. Similarly, an increase in credit provisions does not necessarily indicate a decline in asset quality; assessing these provisions requires considering financing-portfolio growth and expected default risks.

Among the issues arising from the period’s results are the importance of managing credit provisions at Alinma Bank, the effect of interest rates and deposit costs on profit margins, and the expansion of financial technology companies (FinTech), which brings both opportunities and challenges for traditional banks.

Students at Al Yamamah University discussed these topics, sharing their views on how to maintain profits, balance growth with risk management, and use digital transformation to strengthen competitiveness and financial sustainability.

Balancing Credit Provisions and Sustainable Profits

Student Zikra Abdulkareem @Zikra Abdulkareem highlighted the importance of balancing provisions and profitability, saying:

“I believe the best approach for Alinma Bank is to maintain a balanced level of provisions that reflects financing risks. Excessive provisioning could put pressure on current profits, while reducing provisions without justification could expose the bank to future risks.

As for interest rates, controlling deposit costs and operating expenses will be essential to protecting profit margins. I see financial technology as more of an opportunity than a threat, because banks that invest in digital transformation and develop their services will be better able to strengthen their competitiveness and reduce costs over the long term.”

Financing Portfolio Growth and Its Effect on Provisions

Student Yazan Hamoud @Yazan Hamoud stressed the importance of linking provisions to the actual risks in the credit portfolio, saying:

“I don’t think the 25.1% increase in Alinma Bank’s provisions is necessarily a negative sign, particularly if it is linked to growth in the financing portfolio.

In my view, it is better to maintain provisions that reflect actual default risks than to reduce them to temporarily boost profits. The most important things are to monitor the non-performing loan ratio and the extent to which it is covered by provisions, because the quality of the credit portfolio determines the sustainability of the bank’s profits over the long term.”

Hedging Against Risk and Maintaining Financial Stability

Student Rabiah Almugait @Rabiah Almugait explained the importance of taking a measured approach to provisions, saying:

“Alinma Bank needs to manage provisions carefully, because the goal is not simply to achieve higher profits now, but also to ensure the bank’s stability in the future. If the increase in provisions is due to greater default risk, it is better to continue building them to protect the bank. If risks are stable, they can be reduced in a measured way to support profits while preserving the strength of the bank’s financial position.”

Asset Quality and the Priority of Long-Term Stability

Student Albatool Bedairi @Albatool Bedairi explained the accounting implications of the increase in provisions, saying:

“Alinma Bank’s priority should be maintaining asset quality and long-term financial stability, even if this leads to lower profits in the short term. From an accounting perspective, the 25.1% increase in expected credit loss provisions may reflect higher credit risk or growth in the financing portfolio, and does not necessarily mean that actual defaults have increased.

In my view, it is better to set aside provisions that reflect actual risks in accordance with IFRS 9, rather than reduce them to temporarily improve net profit. The quality and sustainability of earnings matter more than generating high profits in the short term.”

Prudent Provisions and the Bank’s Ability to Absorb Risk

Student Dana Al-Sadoun @Dana Al-Sadoun said that increasing provisions at Alinma Bank represents a proactive hedge to protect the portfolio in the future. She added that, based on the data she consulted, the bank’s 3.45% margin provides a buffer against the impact of these provisions. Interest-rate and deposit-cost movements may put pressure on margins in the near term, but the real key to sustainable growth is the bank’s ability to control operating expenses and improve efficiency.

Balancing Credit Protection and Profitability

Student Shahad Alkhamis @Shahad Alkhamis emphasized the importance of combining risk management with improved operating performance, saying:

“In my view, Alinma Bank should balance profits with risk management while maintaining sufficient provisions and controlling deposit costs and operating expenses. It is also advisable to diversify income sources by developing digital services and increasing fee and commission income, while using automation to improve efficiency and reduce costs.”

These views converge on the importance of assessing provisions in light of actual credit risks, rather than focusing only on their immediate effect on profits. Maintaining appropriate provisions helps protect the bank’s financial position, while determining the right level requires examining portfolio quality, default indicators, and financing growth.

Changing Interest Rates and Pressure on Profit Margins

Student Rahaf Alanazi @Rahaf Alanazi highlighted the role of operating efficiency in protecting profit margins, saying:

“Lower interest rates may reduce banks’ profit margins, so controlling operating expenses and reducing deposit costs are among the most important factors in maintaining profitability. Over the long term, a bank that manages its costs efficiently and develops its services will be better positioned to achieve sustainable profit growth.”

Managing Expenses and Deposit Costs

Student Rand Alkhalaf @Rand Alkhalaf stressed the importance of balancing profitability and risk management, saying:

“In my view, banks need to balance maintaining profits with preparing for future risks, so provisions should be set aside in a measured way. When it comes to interest rates, managing deposit costs and operating expenses is essential to sustaining profit growth.”

She added that financial technology presents banks with an opportunity to develop their services, reach more customers, and reduce costs—provided they keep pace with digital developments.

Funding Costs and Sustainable Banking Growth

Student Jumana Alshehri @Jumana Alshehri said that sustainable profitability matters more than the amount of profit earned in a single period, explaining:

“In my view, the best bank is not necessarily the one with the highest profits, but the one that can sustain profit growth and manage risk efficiently. For Alinma Bank, it is better to maintain sufficient provisions to cover defaults rather than reduce them simply to increase current profits.

The effect of interest rates on profits depends on how quickly financing income changes relative to deposit costs, so controlling costs is important for sustaining growth. Financial technology gives banks an opportunity to develop their services and reduce expenses, but falling behind in digital transformation could lead to losing some customers. Ultimately, a bank’s strength is measured by the sustainability of its profits, not just their size.”

Balancing Profit Growth with Meeting Challenges

Student Haifa Almutairi @Haifa Almutairi highlighted the importance of managing costs alongside setting aside provisions, saying:

“I believe the best approach for banks is to balance increasing profits with reducing risks, as provisions are important for protecting the bank in the future. Controlling deposit costs and expenses helps sustain profit growth. I see financial technology as an opportunity for banks to innovate, improve their services, and reduce costs—not necessarily as a threat.”

Operating Efficiency and the Development of Banking Services

Student @عمر الشيخ explained that the banking sector’s sustainable performance depends on balancing credit risk, funding costs, operating efficiency, and income diversification, saying:

“The sustainability of Saudi banks’ profitability depends on balancing credit risk, funding costs, operating efficiency, and income diversification. The results for the first nine months of 2026 show that the sector continued to grow, with net profit reaching SAR 73.6 billion, up 6.8% year on year. However, the 0.5% decline in third-quarter net profit compared with the second quarter suggests that maintaining the pace of growth may become more difficult.”

He added that the sector’s net commission margin was around 3.11%, with differences between banks, while the financing-to-deposit ratio rose from 105.4% to 107%. A ratio above 100% means that a bank relies partly on funding sources other than customer deposits, making it important to attract stable deposits and manage the funding mix to limit funding costs.

He also noted that the cost-to-income ratio improved from 29.3% to 29.0%, while non-financing income declined by 1.2%. He emphasized that these indicators underscore the importance of improving operating efficiency, diversifying revenue, and avoiding excessive reliance on any single source of income.

These perspectives highlight the importance of managing funding costs alongside operating expenses. Protecting profit margins depends not only on interest-rate movements, but also on a bank’s ability to attract deposits, manage its financing portfolio, and grow other sources of revenue.

Financial Technology: Competitive Opportunities and Challenges

Student Halah Alalsheikh @Halah Alalsheikh highlighted the nature of competition between traditional banks and financial technology companies, saying:

“The expansion of financial technology companies represents both an opportunity and a challenge for traditional banks. These companies may capture some customers by offering faster, more convenient services, but they also push banks to develop their apps, improve the customer experience, and lower the cost of providing services.

I therefore believe that banks that succeed in adopting digital transformation and building strategic partnerships will be better able to compete and grow in the future.”

Developing Digital Services and Expanding the Customer Base

Student Nouf Alojayan @Nouf Alojayan emphasized that benefiting from financial technology requires developing services and building effective partnerships, saying:

“The expansion of financial technology companies represents more of an opportunity than a threat for banks, as it helps them develop digital services, reach a wider range of customers, and reduce operating costs by automating processes.

At the same time, competition may increase in services such as payments, transfers, and financing, potentially affecting traditional banks’ market share. I therefore believe banks’ success depends on their ability to keep pace with developments, invest in technology, and build partnerships with financial technology companies rather than simply compete with them. This may boost operating efficiency and profit growth over the long term.”

Digital Transformation and Improving the Customer Experience

Student Noof Alanazi @Noof Alanazi explained that banks’ ability to keep pace with digital change affects their ability to retain customers, saying:

“I believe the expansion of financial technology companies represents more of an opportunity than a threat to traditional banks, as it encourages them to develop digital services, improve the customer experience, and reduce operating costs. Banks that keep up with technological developments and provide convenient, fast services will be better able to compete and maintain their market share.”

Cost Control and Income Diversification

Student Fahad Alruwaished @Fahad Alruwaished offered a perspective that brought together provisions, funding costs, and bank performance, saying:

“I believe that Alinma Bank’s 25.1% increase in provisions is a strategic choice that protects its balance sheet and strengthens credit quality in the future, even if it affects net profit, which stood at SAR 1,588 million according to the data I consulted.

With interest rates expected to fall or remain unchanged, financing income margins may face pressure in the near term. This makes controlling operating costs and managing deposit costs essential to the sector’s profit growth. According to the data I consulted, Al Rajhi Bank led the sector in net profit, while Bank AlJazira recorded the highest profit growth.

The rapid expansion of financial technology companies will not necessarily result in traditional banks losing all their market share. Instead, it may encourage them to accelerate digital transformation and reduce operating expenses through partnerships and innovation, boosting efficiency and helping them retain market share.”

Sustainable Profits Amid Economic Changes

Student Jana Alshahrani @Jana Alshahrani emphasized that the real challenge for Saudi banks is not merely to generate high profits, but to sustain them amid economic changes and intensifying competition, saying:

“Higher provisions may affect current profits, but they strengthen financial stability in the future. Lower interest rates may also put pressure on profit margins, making income diversification and cost control essential.

As for financial technology, I believe competition will not be based solely on the number of customers, but also on the quality, speed, and cost of services.

Therefore, I believe the most successful bank in the future will not necessarily be the most profitable today, but the one best able to manage risk, adapt to change, and achieve sustainable growth.”

Credit Risk Hedging and the Development of Digital Services

Student Raneem Asiri @Raneem Asiri highlighted the importance of balancing risk hedging with maintaining the bank’s profitability, while also making use of opportunities in financial technology, saying:

“In my view, the best approach for Alinma Bank is to increase provisions in a measured way to protect the bank against the risk of customer defaults, while maintaining a good level of profitability. Lower interest rates may reduce funding costs, but they may also put pressure on profit margins. Controlling expenses and deposit costs will therefore remain important to profit growth. I believe financial technology gives banks an opportunity to develop digital services, improve the customer experience, and reduce costs, rather than being viewed only as a competitor.”

Banking Sector Indicators and Slowing Profit Growth

Expert Abdulaziz Khrais commented on developments in banking-sector growth and the effect of credit provisions on profits, saying:

“It appears that bank growth stalled in the second quarter of 2026, after the sector’s combined results showed a decline in profits of less than 1% compared with the previous quarter.

This was the first pause in growth since the fourth quarter of 2023.

Provisions were the main factor limiting profit growth, rising 14% to SAR 2.97 billion.

On the other hand, the banking sector’s key balance-sheet indicators continued to reach new records in assets and loan portfolios, while deposits edged down quarter on quarter. Assets reached SAR 4.89 trillion, deposits SAR 30.9 trillion, and loans SAR 3.31 trillion.”

A Turning Point in the Earnings Cycle and Liquidity Pressures

In an analytical assessment, financial and economic analyst Hamad Alsaeed @Hamad Alsaeed added: Saudi banks are entering a phase of the earnings cycle in which growth drivers differ from one bank to another. The ten banks’ net profit rose 6.8% to SAR 73.6 billion, with around 70% of the increase coming from Al Rajhi Bank and Saudi National Bank. They were the only two banks whose net commission income grew faster than their earning assets, meaning that margin growth drove their performance, while other banks’ growth depended on scale and funding efficiency.

In terms of funding, sector lending grew 6.4%, compared with 4.7% growth in deposits, lifting the financing-to-customer-deposit ratio to 107%. Liquidity remains comfortable, with regulatory ratios below 85% for all banks against a ceiling of 90%, according to the latest data published by Argaam in June 2026. The challenge, therefore, is concentrated in funding costs, particularly after the Saudi Central Bank raised its repo rate to 4.50% in September.

With third-quarter provisions rising, banks are expected to diverge in their ability to attract low-cost deposits and maintain the quality of their portfolios.

Banking Sector Report