Revealed: Top 10 banks in Saudi Arabia

In 2018, the Gulf banking sector asset base grew by 5 per cent, against 8 per cent in 2017. Net profit rose by a higher amount, however – a rise of 12 per cent in 2018 against 7 per cent in 2017. Although there was some tightening in margins in 2018, operating expenses were better controlled, and the cost of risk was lower as a whole. The capital increase was only marginal, but the top 50 banks’ balance sheets remain well capitalised. The low growth in capital in 2018 was mainly due to the introduction of the new international accounting policy IFRS 9, which resulted in positive trends in loan-reserve coverage, but negatively impacted banks’ equity positions. Internal capital generation was good as the sector’s return on assets was higher in 2018.

Mergers and acquisitions major theme

Looking at Saudi Arabia specifically, a merger between Saudi British Bank and Alawwal Bank was completed in June 2019. It created the third biggest bank in Saudi Arabia, with assets of around $68bn. It would push the entity to seventh in the rankings amongst the Gulf’s top 50 banks based on assets. Saudi British Bank was 13th overall in the GCC at end 2018, with Alawwal 25th. Part of the strategy is to capitalise on cost reduction, and management expect savings of 15 per cent of the previous cost base of the separate banks.

A number of other likely mergers are in advanced stages. Saudi’s National Commercial Bank is aiming to acquire its large competitor Riyad Bank. NCB was the third-biggest bank among the top 50 banks by assets at end 2018, with Riyad Bank 8th. A combined institution would have assets of $182bn, pushing it into 2nd place.

READ: Top 10 banks in the UAE

Leader in returns

The highest return in the GCC by country in 2018 was Saudi Arabia, where the banking sector recorded a return on assets of 2.2 per cent (2 per cent in 2017). This was followed by the UAE at 1.67 per cent (2017, 1.64 per cent), Oman at 1.34 per cent, Kuwait at 1.25 per cent and Bahrain at 0.9 per cent.

By individual return on assets, the highest profitability in the list was Saudi British Bank at 2.83 per cent, followed Al Rajhi Banking Corporation at 2.82 per cent, and National Bank of Umm Al Qawain at 2.79 per cent.

TOP 10 BANKS IN SAUDI ARABIA
(Based on total assets of listed banks at the end of 2018)

1. National Commercial Bank
Assets in 2018 ($000): 120,858,852
Assets in 2017 ($000): 118,603,214
Growth percentage (2017-2018): 1.90
2018 net profit ($000): 2,844,108
Return on assets (ROA) in 2018: 2.35%

2. Al Rajhi Banking Corporation
Assets in 2018 ($000): 97,298,030
Assets in 2017 ($000): 91,491,641
Growth percentage (2017-2018): 6.35
2018 net profit ($000): 2,745,339
Return on assets (ROA) in 2018: 2.82%

3. Samba
Assets in 2018 ($000): 61,293,997
Assets in 2017 ($000): 60,674,932
Growth percentage (2017-2018): 1.02
2018 net profit ($000): 1,471,776
Return on assets (ROA) in 2018: 2.40%

4. Riyad Bank
Assets in 2018 ($000): 61,283,674
Assets in 2017 ($000): 57,671,401
Growth percentage (2017-2018): 6.26
2018 net profit ($000): 1,257,397
Return on assets (ROA) in 2018: 2.05%

5. Banque Saudi Fransi
Assets in 2018 ($000): 50,701,260
Assets in 2017 ($000): 51,444,272
Growth percentage (2017-2018): -1.44
2018 net profit ($000): 881,723
Return on assets (ROA) in 2018: 1.74%

6. Arab National Bank
Assets in 2018 ($000): 47,526,392
Assets in 2017 ($000): 45,784,067
Growth percentage (2017-2018): 3.81
2018 net profit ($000): 882,552
Return on assets (ROA) in 2018: 1.86%

7. Saudi British Bank
Assets in 2018 ($000): 46,533,057
Assets in 2017 ($000): 50,027,423
Growth percentage (2017-2018): -6.98
2018 net profit ($000): 1,315,260
Return on assets (ROA) in 2018: 2.83%

8. Alinma Bank
Assets in 2018 ($000): 32,343,479
Assets in 2017 ($000): 30,598,407
Growth percentage (2017-2018): 5.70
2018 net profit ($000): 671,195
Return on assets (ROA) in 2018: 2.08%

9. Saudi Investment Bank
Assets in 2018 ($000): 25,609,081
Assets in 2017 ($000): 25,010,658
Growth percentage (2017-2018): 2.39
2018 net profit ($000): 388,922
Return on assets (ROA) in 2018: 1.52%

10. Alawwal Bank
Assets in 2018 ($000): 21,866,024
Assets in 2017 ($000): 26,630,179
Growth percentage (2017-2018): -17.89
2018 net profit ($000): 301,399
Return on assets (ROA) in 2018: 1.38%