When we hear that Saudi banks made nearly SAR 25 billion in just three months, the figure alone may seem enough to sum up the banking sector’s performance.

But behind those profits is a bigger economic story: the money deposited by individuals and companies, the loans banks provide, and the costs they bear to make financing available.

In the second quarter of 2026, the ten listed Saudi banks made a combined profit of around SAR 24.9 billion, up nearly 8% from the same period a year earlier. Their first-half profits reached SAR 48.82 billion.

So how do banks make these profits? And does growth in loans and deposits mean their profits will necessarily keep rising?

Where do banks’ profits come from?

A simple example can help explain how banks operate.

Suppose you deposit money in a bank. To you, it is savings you can use under the terms of your account. To the bank, it is a financial liability to you. The bank can put some of the funds available to it toward financing and investment, subject to regulatory requirements and the need to maintain sufficient liquidity.

When a bank finances a home purchase or a company’s expansion, it earns a return on that financing. In return, it may pay returns on some deposits and cover staff, technology, and operating costs, as well as costs related to the risk that borrowers may not repay their loans.

The difference between a bank’s revenue and its costs and expenses ultimately determines its net profit.

Banks do not rely on financing alone; they also earn revenue from banking services, fees, and some investment activities.

So, higher profits may result from increased business volumes, better returns on financing, growth in other revenue, or lower costs.

What does SAR 3.25 trillion in loans mean?

At the end of June 2026, net loans at listed Saudi banks totaled around SAR 3.25 trillion.

But that figure does not mean the banks issued new loans worth that amount in three months.

Rather, it represents the outstanding loan balance on a specific date—in other words, financing already provided, on which amounts are still owed.

This distinction matters because second-quarter profits are measured over three months, while the loan balance reflects the size of the financing portfolio at the end of that period.

The larger this portfolio grows, the greater the opportunity to earn additional financing income—provided the loans are viable and borrowers can meet their repayment obligations.

Deposits: why are they just as important as loans?

Meanwhile, customer deposits at listed banks totaled around SAR 3.15 trillion at the end of the second quarter.

Deposits are more than an indicator of the money a bank holds; they are a major source of funding for its business.

This highlights an important relationship: a bank needs to grow lending to generate revenue, but it also needs stable funding sources at a reasonable cost.

Second-quarter data showed that deposits grew by around 9% year over year, compared with growth of nearly 7% in net loans.

Although the loan balance remains larger than customer deposits, deposits growing at a faster pace helps improve the balance between expanding financing and the funds available to banks.

Loans exceeding deposits does not necessarily mean there is a liquidity problem. Banks have other funding sources and are subject to regulatory requirements concerning liquidity and capital.

Why did profits exceed analysts’ expectations?

Before financial results are announced, analysts estimate the profits they expect banks to make, based on their business performance and economic and financial conditions.

When actual profits come in above those estimates, they are said to have exceeded analysts’ expectations.

That is what happened in the second quarter of 2026: actual profits exceeded the average estimates of a group of research firms by around 4%.

But beating expectations does not necessarily mean every aspect of performance was better.

A report by Aljazira Capital noted that banks’ provisions rose by 33.5% in the second quarter compared with the same period a year earlier.

Provisions are accounting amounts set aside to cover expected credit losses, such as the possibility that some borrowers may default. An increase in provisions can reduce profits, even when financing revenue is growing.

That is why analysts look at loan quality, funding costs, and provisions, rather than focusing on net profit alone.

Is continued profit growth guaranteed?

Rising bank profits alongside loan and deposit growth point to an expansion in financial activity, but they do not guarantee that growth will continue at the same pace.

Future profits may be affected by changes in interest rates, the cost of attracting deposits, demand for financing, loan quality, and how efficiently expenses are managed.

So the question worth following is not just: How much did banks earn?

It is: How much of those profits came from growth in core banking activity? And can banks sustain that growth while maintaining financing quality and liquidity?

Second-quarter 2026 results reveal a banking sector whose business is expanding and profits are growing, but understanding its future takes more than looking at the bottom-line figure.

Between loans, deposits, and the cost of funds, the economic story behind the SAR 25 billion comes into focus.