After three years of declining profits in the wake of the 2008-09 international economic downturn, Saudi Arabia’s domestic banking sector posted solid growth in 2011 and 2012. With more than SR1.64trn ($437.6bn) in total assets as of the end of the third quarter of 2012, up from SR1.54trn ($410.41bn) at the end of 2011, the sector has the second-largest asset base in the GCC, behind the UAE.

The industry’s current position of strength is largely the result of a period of asset building after the financial crisis. With the support of the Saudi Arabian Monetary Authority (SAMA), the central bank, in 2009 and 2010 local banks slowed credit issuance and bumped up provisioning in an effort to limit their exposure to a few troubled companies at home and volatility on international markets.

As of late 2012 this strategy was considered to have been successful; by the end of the third quarter of 2012, banks’ profits had reached SR25.9bn ($6.9bn) since the beginning of the year, compared to SR23.4bn ($6.24bn) over the same period in 2011 and SR19.6bn ($5.22bn) over the first three quarters of 2010. With these figures in mind, 2012 was on track to be the most profitable year for the banking industry since 2006. According to a mid-September 2012 report by Credit Suisse, Saudi Arabia’s top six banks are expected to post an average net income growth of 17% for the 2013-15 period.

Market Concentration

Saudi Arabia’s domestic banking sector consists of 12 institutions, a number of which are jointly owned by foreign banks. Assets, deposits and credit are heavily concentrated in the top institutions, with the top four banks – namely National Commercial Bank (NCB), Al Rajhi Bank, Samba Financial Group and Riyad Bank – accounting for nearly 60% of total sector assets. Additionally, by the end of 2011 these four institutions held almost 73% of total sector investments, according to a recent report from NCB. With the exception of the market leader NCB, all the banks are listed on the Saudi Stock Exchange (Tadawul). As of the end of the third quarter of 2012 the listed banks made up the second-largest sector on the exchange in terms of market capitalisation, after the petrochemicals industry. Al Rajhi, Samba and Riyad, the top-three listed institutions, accounted for around 57% of total financial sector market capitalisation as of end-September 2012.


NCB, Saudi Arabia’s oldest bank, was founded by royal decree in 1953. The bank remains government-owned today, with 69% controlled by the Public Investment Fund, a specialised credit institution, and 10% owned by the General Organisation for Social Insurance, a federal agency. Private Saudi investors hold the remaining 21% of the bank. NCB has performed well in recent years, largely as a result of the recent implementation of a revenue diversification initiative, which has seen the bank boost fees and other incomes substantially in recent years.

As of the end of 2011 NCB operated 288 branches and 1791 ATMs throughout the Kingdom, up from the 281 and 1626, respectively, at the end of 2010. The bank’s customer base was at 2.8m at the end of 2011, and customer transactions for the year reached 280m, nearly 90% of which were carried out electronically. In addition to operating branches in Bahrain, Lebanon, Singapore and South Korea, in 2008 NCB acquire a majority holding of around 65% in Türkiye Finans Katılım Bankası, the largest Islamic bank in Turkey. While the bank is technically government-owned, it is operated as an independent institution. NCB is widely expected to play a central role in the government’s ongoing infrastructure investment programmes.

As of the end of 2011 NCB had total assets of SR301.2bn ($800.27bn), up 6.7% from SR282.4bn ($75.26bn) in 2010 and SR257.5bn ($68.62bn) in 2009. In the first three quarters of 2012 total assets jumped further, reaching SR321bn ($85.55bn). Net income (excluding minority interests), which was at SR4.7bn ($1.25bn) in 2010, jumped nearly 28% to SR6bn ($1.6bn) in 2011, and grew another 12.7% year-on-year in the first nine months of 2012, reaching SR5bn ($1.33bn) by the end of September.

The bank saw a 20.9% year-on-year (y-o-y) jump in fee income from banking services and a 7.5% y-o-y increase in net special commission income as of the end of September 2012. NCB’s net income has nearly tripled since 2008, when it hit a low of SR2bn ($533m) due to provisioning after the crisis. Customer deposits reached SR239.5bn ($63.83bn) in 2011, up from SR229.2bn ($61.81bn) at the end of 2010 and SR202.6bn ($53.99bn) at the end of 2009.

Al Rajhi Bank

Al Rajhi, which is the Kingdom’s largest Islamic bank and the largest bank by market capitalisation, has grown substantially over recent years, surpassing a number of its competitors to become the second-largest bank by assets as of the end of 2011. Al Rajhi Bank was formally launched in the mid-1970s, but traces its lineage back to the Al Rajhi Trading and Exchange Corporation, which was founded in the 1950s by the Al Rajhi family. The family still holds a controlling stake in the bank today. The bank operates more than 500 branches and 3100 ATMs in the Kingdom, which allows it to effectively dominate the domestic retail market. Additionally, it is active in Malaysia, Kuwait and Jordan.

According to a recent report released by The Banker magazine, Al Rajhi Bank was the number one Islamic bank in the world in terms of assets in 2011, excluding banks based in Iran and Islamic windows of conventional banks. Al Rajhi had total assets of around SR220.8bn ($58.84bn) as of the end of 2011, up from SR184.4bn ($49.14bn) at the end of 2010. Like NCB, Al Rajhi had a strong performance in 2012 thus far, with assets reaching SR238.2bn ($63.48bn) as of the end of the second quarter of 2012. Similarly, the bank’s net income reached SR4.1bn ($1.09bn) in the first six months of 2012, compared with SR3.5bn ($932.75m) in the first half of 2011.


Samba, the Kingdom’s third-largest bank by assets, was launched by royal decree in February 1980. The bank, which was initially funded by the sale of two Citibank branches to Saudi nationals, had assets of SR199.5bn ($53.17bn) at the end of the second quarter of 2012, up from SR192.8bn ($51.38bn) at the end of 2011 and SR190.9bn ($50.87bn) at the end of the first quarter of 2011. Samba is majority-owned by a number of government entities, including the Public Investment Fund (23%), the Public Pension Agency (15%) and the General Organisation for Social Insurance (11%). Around 50% of the company is listed on the Tadawul.

With less than 100 branches and just over 500 ATMs, Samba is not considered to be a major retail player; instead, it focuses primarily on the corporate and institutional segments. According to NCB research, as of the second quarter of 2012, Samba recorded profit growth of 3.5% y-o-y.

Riyad Bank

Riyad Bank, which was founded in the late 1950s, is a major domestic retail player, with a network of more than 250 branches and 2600 ATMs in the Kingdom. Around 30% of the bank is listed on the Tadawul, while around 22% is held by the Public Investment Fund and another 22% by the General Organisation for Social Insurance.

Riyad Bank is the Kingdom’s fourth-largest, with around SR177.1bn ($47.2bn) in total assets as of the end of the third quarter of 2012, down slightly from SR180.9bn ($48.2bn) at the end of 2011, though up around 6% y-o-y. In addition to local operations, Riyad Bank is active in the UK, US and Singapore.


Rounding out the top domestic banks are Banque Saudi Fransi (BSF) and Saudi British Bank (SABB), both of which are joint ventures between a local company and a foreign institution. BSF is affiliated with Crédit Agricole, the largest bank in France and the second largest in Europe, while SABB is linked to HSBC, Europe’s largest bank. Together, the Kingdom’s top six banks accounted for more than 77% of total banking sector assets as of the end of the second quarter of 2012.

Crédit Agricole controls around 31% of BSF, while another 31% is listed on the Tadawul, nearly 13% is owned by the General Organisation for Social Insurance and the remainder is held by private Saudi nationals. The bank, which was founded in 1977, had total assets of SR147.1bn ($39.2bn) at the end of the second quarter of 2012, up from SR140.5bn ($37.44bn) at the end of 2011. Net income for BSF reached a total of approximately SR2.9bn ($772.85bn) in 2011. The bank operates a domestic network of 85 branches and 586 ATMs Around 40% of SABB, which was founded in January 1978, is held by UK-based HSBC, while 29% is listed on the Tadawul, 9.5% is held by the General Organisation for Social Insurance and the remaining shares are held by local private investors. As of the end of September 2012 the bank possessed SR156.2bn ($41.63bn) in total assets, up from SR138.7bn ($36.96bn) at the end of the previous year.