The Saudi banking sector has continued its strong performance in recent years, recording new and unprecedented historical results. The 10 banks listed on the financial market successfully achieved a net profit of $6.63 billion (SAR 24.87 billion) during the second quarter of 2026, marking an annual growth of 12.5 percent and an increase of $738 million (SAR 2.77 billion) compared to the same period in 2025.

This performance was supported by an increase in financing and investment income and improved operating revenues across the ten banks: Saudi National Bank, Al Rajhi Bank, Riyad Bank, Saudi Awwal Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Bank Albilad, The Saudi Investment Bank, and Bank AlJazira.

Al Rajhi Bank maintained its leading position as the most profitable Saudi bank during the second quarter of 2026, recording a net profit of SAR 7.01 billion, compared to about SAR 6.15 billion in the same period of 2025, achieving a 14 percent growth.

Operating Income

Performance was supported by a 13.3 percent increase in total operating income, along with growth in net financing and investment income, banking service fees, and foreign exchange conversion income.

In second place came the Saudi National Bank with a net profit of SAR 6.61 billion, representing a growth rate of 7.64 percent, compared to profits of SAR 6.14 billion in the comparative quarter of 2025.

The bank explained that the growth in its net profit is attributed to an 11.3 percent growth in total operating income, reaching SAR 10.6 billion, driven by higher net income from financing and investments, as well as increased net foreign exchange conversion income.

Riyad Bank ranked third with profits nearing SAR 2.65 billion, achieving a growth rate of 2.02 percent compared to SAR 2.60 billion during the same quarter of 2025. The bank attributed this to an increase in net income, total operating income, net special commission income, and dividend income, which was offset by a decline in net fee and commission income, net gains from the sale of investments held for non-trading purposes, other operating revenues, and net foreign exchange conversion income.

Operational Efficiency

Commenting on the financial performance of Saudi banks during the second quarter, Dr. Sulaiman Al-Humaid Al-Khalidi, financial and economic expert and member of the Saudi Economic Association, told Asharq Al-Awsat that Saudi banks' profits in the second quarter of 2026 recorded historical results and strong performance driven by economic activity. They continued to achieve robust financial results, which directly reflect the strength of the local economy despite geopolitical crises in the region, continued growth in financing and credit, higher operational efficiency, and improved asset quality.

He pointed out that the most prominent reasons for achieving these profits are the continued growth of retail and corporate financing portfolios, supported by Vision 2030 projects, higher income from special commissions due to interest rates remaining at levels supportive of profit margins, and growing non-financing revenues, especially from fees, banking services, and wealth management.

In addition, according to Al-Khalidi, there was a relative decrease in the cost of risk alongside improved credit portfolio quality, stable default rates, and the robustness of financial positions and capital, which enhanced banks' ability to expand and achieve sustainable growth.

Dr. Al-Khalidi expects the banking sector to maintain its positive performance during the second half of the year, achieving profit ratios exceeding SAR 98 billion. He noted that the financial results showed Al-Rajhi Bank's profit growth to be very excellent, surpassing SAR 7 billion, and that it will continue to grow due to government support, ongoing spending on megaprojects, and high demand for corporate and retail financing.

He added that profit growth may experience a more moderate pace if interest rates begin to fall, which could pressure profit margins. However, the strength of the Saudi economy and the diversification of banks' income sources make the sector one of the most resilient and profitable in the financial market, and this year's results will be historic overall, setting record figures and potentially approaching SAR 100 billion.

Economic Variables

For his part, economic analyst and CEO of G-World Studies, Mohammed Hamdi Omar, told Asharq Al-Awsat that the financial results of the Saudi banking sector during the second quarter reflect the robustness of the banks' financial position and their high capacity to adapt to economic variables. He added that the consolidated profits exceeded many expectations.

He showed that profitability was not a coincidence, but rather based on solid operational and financial drivers, including expanding profit margins as banks continued to maximize benefits from high interest rates. This was notably reflected in net special commission and financing income, as well as corporate credit momentum.

He added that these results come despite a relative slowdown in some retail loan sectors such as mortgage financing, as banks managed to bridge the gap and surpass it through significant expansion in corporate financing. This growth is primarily driven by high demand for credit to finance megaprojects and infrastructure initiatives linked to Vision 2030.

Omar pointed out that the diversification of income sources was clearly evident in the sector, as the results showed banks' success in diversifying their operating revenues away from traditional interests, marked by strong growth in income from banking service fees, foreign exchange, and investment operations returns.

Corporate Financing

He continued that efficient risk management played an important role in these results, with asset quality playing a decisive role. Some banks maintained a healthy credit portfolio and managed to reduce credit loss provisions, releasing a large portion of operating profits directly into net income for shareholders.

Omar expects the sector to witness a phase of tactical transformations in the second half of the year and beyond to keep pace with the macroeconomic landscape. With the management of the interest rate cycle and expectations of central banks moving toward a rate-cut path, we may see a slight and gradual contraction in profit margins.

He explained that lower borrowing costs will act as a strong catalyst to revive demand for consumer loans and mortgages, in addition to the continued leadership of corporate financing, which will remain the largest strategic driver of bank asset growth.

Omar believes that as many developmental projects enter advanced stages of actual implementation, the need for credit facilities and syndicated bond financing will increase, alongside a trend toward investing in technology to control costs. This is crucial for the banking sector to maintain high profitability levels in an environment that may see declining interest rates, with banks accelerating digital transformation and employing artificial intelligence and regulatory technology (RegTech) tools to raise operational efficiency and reduce operating costs.