Alvarez & Marsal releases Q2 2022 Saudi Arabia banking pulse

Alvarez & Marsal releases Q2 2022 Saudi Arabia banking pulse

Loans and advances (L&A) growth continued to outpace deposit growth

Net interest margin (NIM) improved for the first time since the last four quarters supported by increase in benchmark rates

Kingdom of Saudi Arabia: Leading global professional services firm Alvarez & Marsal (A&M) has released its latest Saudi Arabia (KSA) Banking Pulse for Q2 2022. The report suggests that profitability for the top 10 KSA banks showed a moderate improvement as growth in aggregate net profit was 2.7 percent from Q1’22 resulting in an increase of 41 bps in return on equity (RoE). Simultaneously, L&A and deposit growth slowed while NIM expansion and improvement in cost efficiencies continued.

L&A of the major Saudi banks increased by 4.2 percent quarter-on-quarter (QoQ) while deposit grew by 3.2 percent QoQ in Q2’22. NIM expanded to 3 percent and yield on credit increased to 5.3 percent due to rise in benchmark rates.

The return on assets (RoA) declined 3 bps QoQ due to an increase in total assets relatively higher than the net profit. Asset quality deteriorated slightly as non-performing loans (NPL) / net loan ratio increased from 1.5 percent in Q1’22 to 1.6 percent in Q2’22.

A&M’s KSA Banking Pulse examines data of the 10 largest listed banks