Latest news with #corporateLending
Finextra
08-07-2025
- Business
- Finextra
How Technology Can Enable an Overdue Rethink of Corporate Lending
At the Temenos Community Forum 2025, Maurya Murphy, Senior Product Director (Corporate), Temenos and Mohammed Khatib, Director of Information Technology, The Arab Energy Fund, joined FinextraTV's studio to discuss the challenges within corporate lending technology. Investigating where legacy systems need modernising, Murphy and Khatib outline emerging technologies that enable an easier, more corporate-friendly approach to loan lifecycles.
Arab News
30-06-2025
- Business
- Arab News
Saudi banks post 5.4% loan growth in Q1 as lending accelerates
RIYADH: Net loans and advances across the Saudi Arabia's 10 largest listed banks rose by 5.4 percent in the first quarter of 2025, underscoring robust lending momentum at the start of the year. According to Alvarez & Marsal's latest KSA Banking Pulse report, this growth was primarily driven by a 7.5 percent increase in corporate lending, which continues to represent more than half of total gross loans. The banking sector's strong start reflects the wider strength of Saudi Arabia's economic transformation efforts. Resilient credit growth signals sustained confidence among borrowers, particularly within the corporate sector, where demand for financing remains high amid ongoing large-scale infrastructure and development projects. Meanwhile, the loan-to-deposit ratio climbed to 106.1 percent, up from 104.7 percent in the previous quarter, marking its highest level in recent times as credit expansion outpaced deposit growth. Deposits rebounded by 4 percent after a decline in the prior quarter, supported by an 8.1 percent increase in time deposits. The report also noted a 3.2 percent rise in operating income quarter on quarter, buoyed by a 9.6 percent surge in non-interest revenue from trade finance, foreign exchange, and investment gains. Sam Gidoomal, managing director and head of Middle East Financial Services at A&M, commented: 'Saudi banks are entering a new strategic phase marked by stronger capital stewardship and a focus on unlocking liquidity through innovation — from potential mortgage securitization to targeted portfolio rebalancing.' 'This financial agility, combined with solid credit growth and cost control, positions the sector to actively support Vision 2030 priorities and channel capital toward infrastructure and giga-projects,' he added. Cost discipline was evident across the sector, as operating expenses fell by 1.7 percent, contributing to a 149 basis point improvement in the cost-to-income ratio to 29.8 percent. Aggregate net income increased 6.3 percent to SR22.2 billion ($5.9 billion), while return on equity strengthened by 44 basis points to 15.3 percent and return on assets edged up to 2.1 percent. The strong quarterly performance detailed in A&M's KSA Banking Pulse coincides with a broader surge in credit expansion across the sector. According to data from the Saudi Central Bank, the Kingdom's bank outstanding loan portfolio rose to SR3.13 trillion at the end of April, reflecting a 16.51 percent increase over the past year and marking the fastest annual growth rate since mid-2021. The data shows that approximately SR443 billion in new credit was issued over the past 12 months, highlighting how the Kingdom's project-driven growth model is reshaping bank balance sheets. Real estate developers remain the largest borrowers, accounting for 21.77 percent of total corporate credit. The analysis further underscored that impairment charges declined by 15.8 percent, alleviating margin pressures associated with interest rate normalization. Non-interest income rose to 23 percent of total operating income in the first quarter, signaling progress in revenue diversification. The cost of risk improved to 0.27 percent, down from 0.34 percent in the prior quarter, while the capital adequacy ratio remained robust at 19.3 percent. Yield on credit moderated to 8 percent in the first quarter, down from 8.4 percent in the prior period, while the cost of funds declined to 3.3 percent. The net interest margin edged slightly lower to 2.87 percent from 2.94 percent, reflecting ongoing margin pressures amid interest rate normalization. The coverage ratio decreased to 154.8 percent, and operating income relative to total assets remained stable at 3.6 percent. Return on risk-weighted assets was unchanged at 2.7 percent quarter on quarter. Asad Ahmed, A&M managing director, Financial Services, added: 'The uptick in lending and deposit mobilization reflects improving business confidence and a rebalancing of liquidity across the sector.' 'While margin pressures persist amid interest rate normalization, the decline in impairments and growth in fee-based income indicate that banks are diversifying their revenue streams and adapting effectively to the evolving environment,' he added.
Zawya
30-06-2025
- Business
- Zawya
Alvarez & Marsal releases Saudi Arabia Banking Pulse for Q1 2025
Loan-to-deposit ratio increases to 106.1%, driven by a 7.5% surge in corporate lending. Cost efficiency strengthens, with the cost-to-income ratio improving to 29.8% as operating expenses decline. Kingdom of Saudi Arabia - Leading global professional services firm Alvarez & Marsal (A&M) has released its latest edition of the Kingdom of Saudi Arabia (KSA) Banking Pulse for Q1 2025. The report, which analyzes the performance of the Kingdom's 10 largest listed banks for the first quarter of 2025, highlights a strong start to the year marked by improved profitability, cost discipline, and accelerating corporate credit growth. Lending momentum accelerated to 5.4 percent quarter-on-quarter (QoQ), driven by 7.5 percent growth in corporate loans, while deposits increased by 4.0 percent QoQ. That said, the aggregate loan-to-deposit ratio (LDR) rose to 106.1 percent, the highest in recent quarters. Operating income increased by 3.2 percent QoQ, bolstered by a 9.6 percent surge in non-interest income, while operating expenses declined by 1.7 percent QoQ. This resulted in a 149-basis point improvement in the cost-to-income (C/I) ratio, which declined to 29.8 percent. Aggregate net income rose by 6.3 percent QoQ to SAR 22.2 billion, supported by a 15.8 percent decline in impairment charges. Return on equity (RoE) improved by 44 basis points to 15.3 percent, while return on assets (RoA) edged up to 2.1 percent. The country's 10 largest listed banks analyzed in A&M's KSA Banking Pulse are Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB) and Bank Aljazira (BJAZ). Mr. Sam Gidoomal, Managing Director and Head of Middle East Financial Services, noted: 'Saudi banks are entering a new strategic phase marked by stronger capital stewardship and a focus on unlocking liquidity through innovation - from potential mortgage securitization to targeted portfolio rebalancing. This financial agility, combined with solid credit growth and cost control, positions the sector to actively support Vision 2030 priorities and channel capital toward infrastructure and giga-projects.' The prevailing trends identified for Q1 2025 are as follows: Lending momentum accelerated, with net loans and advances rising by 5.4% QoQ, driven by a 7.5% increase in corporate lending, which now represents over half of total gross loans. Deposit growth rebounded, increasing by 4.0% QoQ, led by an 8.1% rise in time deposits, reversing the decline seen in the previous quarter. Loan-to-deposit ratio (LDR) rose to 106.1%, reflecting faster credit expansion relative to funding growth - the highest LDR level in recent quarters. Operating income increased by 3.2% QoQ, supported by a 9.6% rise in non-interest income, particularly from trade finance, foreign exchange, and investment gains. Cost-to-income ratio improved to 29.8%, down 149bps QoQ, as banks controlled expenses and enhanced operating efficiency. Net income rose by 6.3% QoQ to SAR 22.2 billion, underpinned by a 15.8% decline in impairment charges, with profitability ratios strengthening across the sector. The table below sets out the key metrics: CATEGORY METRIC Q4 2024 Q1 2025 Size Loans and Advances Growth (QoQ) 3.3% 5.4% Deposits Growth (QoQ)) -1.3% 4.0% Liquidity Loan-to-Deposit Ratio (LDR) 104.7% 106.1% Income & Operating Efficiency Operating Income Growth (QoQ) 1.1% 3.2% Operating Income / Assets 3.6% 3.6% Non-Interest Income / Operating Income 21.7% 23% Yield on Credit (YoC) 8.4% 8.0% Cost of Funds (CoF) 3.5% 3.3% Net Interest Margin (NIM) 2.94% 2.87% Cost-to-Income Ratio (C/I) 31.3% 29.8% Risk Coverage Ratio 161.0% 154.8% Cost of Risk (CoR) 0.34% 0.27% Profitability Return on Equity (RoE) 14.8% 15.3% Return on Assets (RoA) 2.0% 2.1% Return on Risk-Weighted Assets (RoRWA) 2.7% 2.7% Capital Capital Adequacy Ratio (CAR) 19.7% 19.3% Source: Financial statements, investor presentations, A&M analysis Mr. Asad Ahmed, A&M Managing Director, Financial Services commented: 'The uptick in lending and deposit mobilization reflects improving business confidence and a rebalancing of liquidity across the sector. While margin pressures persist amid interest rate normalization, the decline in impairments and growth in fee-based income indicate that banks are diversifying their revenue streams and adapting effectively to the evolving environment.' Methodology A&M's KSA Banking Pulse examines data of the 10 largest listed banks in the Kingdom, comparing the Q1 25 results against Q4 24 results. Using independently sourced published market data and 16 different metrics, the report assesses banks' key performance areas, including size, liquidity, income, operating efficiency, risk, profitability, and capital. The country's 10 largest listed banks analyzed in A&M's KSA Banking Pulse are Saudi National Bank (SNB), Al Rajhi Bank, Riyad Bank (RIBL), Saudi British Bank (SABB), Banque Saudi Fransi (BSF), Arab National Bank (ANB), Alinma Bank, Bank Albilad (BALB), Saudi Investment Bank (SIB) and Bank Aljazira (BJAZ). About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a leading global professional services firm. Renowned for its leadership, action and results, Alvarez & Marsal provides advisory, business performance improvement and turnaround management services, delivering practical solutions to address clients' unique challenges. With a world-wide network of experienced operators, world-class consultants, former regulators and industry authorities, Alvarez & Marsal helps corporates, boards, private equity firms, law firms and government agencies drive transformation, mitigate risk and unlock value at every stage of growth. To learn more, visit: CONTACT: Tally Sargent Hanover Middle East
