The growth is attributed to several key factors, including a rise in oil prices, continued government spending, and high interest rates, which have significantly boosted banks' earnings from loans. The Kingdom’s banking sector has benefited from these favorable conditions, supporting mega projects under Saudi Arabia’s Vision 2030 initiative, which aims to diversify the economy beyond oil. Banks have also experienced a considerable rise in deposits, with total deposits growing 8% year-on-year to SR2.64 trillion, bolstered by a notable 20% increase in term deposits.
The asset side of the banking sector has similarly expanded, with total credit reaching SR2.79 trillion, up 12% compared to the previous year. The loans-to-deposits ratio, a critical liquidity metric, has also seen a climb to 80.73%, reflecting a healthy demand for credit amid the nation’s ongoing infrastructural and developmental projects.
In addition to these traditional drivers of growth, the rise of financial technology (fintech) has played a transformative role in reshaping the sector. SAMA’s efforts in fostering innovation, particularly through initiatives like the regulatory sandbox and the open banking framework, have paved the way for significant technological advancements. These measures are not only enhancing operational efficiency but also improving customer experience and broadening financial inclusion across the Kingdom.
The competitive landscape within Saudi Arabia’s banking sector has intensified as financial institutions race to meet the growing expectations of younger, more tech-savvy consumers. A growing emphasis on digital banking and streamlined customer journeys has become critical, with banks increasingly focusing on fully digitizing services like personal loans, home financing, and corporate banking solutions.