The banking sector sits at the core of Vision 2030. Saudi banks are playing a growing role in supplying credit for giga-projects while also rapidly expanding their support for small and medium-sized enterprises (SMEs), which are important vehicles for Saudi Arabia’s economic diversification and bring more women into the labour market. Thanks to well-organised roadmaps, most notably the Financial Sector Development Programme (FSDP), governmental entities and private commercial banks have managed to successfully execute several economic and social priorities – asset growth is stable and positive, Saudiisation rates are above the private sector average and private sector lending is now the main driver for banking sector growth. Sector penetration has risen significantly since 2014, and non-cash transactions have gone from being a minority to the majority over the same period.
Structure & Oversight
The main regulator for the banking sector is the Saudi Central Bank (SAMA). The IMF describes SAMA as the macroprudential authority that has control over banks and finance companies. These efforts are also complemented by SAMA’s participation in the National Financial Stability Committee (NFSC), an interagency forum to discuss and monitor financial stability-related issues. The NFSC includes the Ministry of Finance, Capital Market Authority (CMA) and Insurance Authority.
The foundational law for the banking sector is Royal Decree No. (M/5) of 1966, more commonly known as the 1966 Banking Control Law (BCL). It specifies banking licensing requirements, how new regulations for the sector are developed and implemented, and penalties for legal transgressions. An initiative to update and replace the BCL was under way as of the end of 2025 and a draft was submitted to Saudi legislative authorities in August 2025. The New Banking Law will replace the BCL and will serve to bring Saudi banking regulation up to date.
The 2020 Saudi Central Bank Law updated rules about the central bank’s leadership and regulatory responsibilities. In 2018 SAMA published its bank licensing guidelines, which regularised the banking licence application procedure and clarified the division of labour between the Ministry of Finance and SAMA. Beyond the banking sector, SAMA introduced the 2012 Finance Company Control Law, streamlining regulation for non-banking financial institutions and for investment subsidiaries of banks. Alongside regulatory reforms, established lenders continue to emphasise governance and risk discipline as the foundation of sustainable growth. “A modern bank must be both digital and disciplined. Innovation only creates value when it strengthens trust, protects customers and aligns with the long-term stability of the financial system,” Bader Hamad Alsalloom, CEO of Banque Saudi Fransi (BSF), told OBG.
Another key piece of legislation for the sector is the Systematically Important Financial Institution (SIFI) Law of 2020, which gives SAMA and other regulators the powers to be able to designate various SIFIs in the Kingdom. Lastly, the CMA is responsible for regulating the Saudi stock market. The Capital Markets Law of 2003 regulates securities but also lenders’ investment funds, and the Capital Market Institutions Regulations of 2005 stipulates that in order for foreign entities to invest in the Kingdom, they must have a local partner. This local partner is often a financial institution.
Strategies & Policies
The Saudi banking sector is developing rapidly. Vision 2030 is imposing new requirements on the sector as well as bolstering efforts to modernise and grow Saudi financial service providers. One of Vision 2030’s major programmes is the FSDP, which aims to turn Saudi Arabia into a global financial centre. The FSDP also aims to increase bank penetration in the Saudi SME segment, especially in the non-oil sector, and improve digitalisation. “Expanding access to financing for underserved segments is not just a social mandate but a strategic economic lever that helps broaden participation in the private sector and supports SME-led growth in the non-oil sector,” Ibrahim Al Rashid, CEO of Social Development Bank, told OBG.
Since the start of 2025 the CMA has implemented a funds passporting regime to create a unified framework for investment funds across the GCC, easing cross-border investment and deepening integration. The FSDP has exceeded several of its goals – retail consumer non-cash transactions have risen from 36% in 2019 to 79% in 2024, exceeding Vision 2030’s 2025 target of 70%; banking sector assets have almost doubled from SR2.6trn ($701.5bn) in 2019 to SR4.5trn ($1.2trn) in 2024, far beyond the SR3.5trn ($933.1bn) target; the number financial technology (fintech) players has grown from 82 to 280, above the target of 230. Credit to the private sector as a share of GDP has also increased, exceeding programme targets. “Saudi Arabia’s financial sector is no longer just adopting technology – it is becoming a driver of digital innovation across the economy,” George Harrak, CEO of Jeel, a financial and technology ecosystem enabler, told OBG. “Banks and fintechs are now co-creating solutions that redefine customer experience, efficiency and inclusion.”
Modernisation Efforts
Some indicators are lagging, including SME loans as a percentage of bank loans, which, as of the second quarter of 2025, were at 10.6% compared to a target of 11%; assets under management stood at 24.4%, below the target of 31%; and the debt market compared to GDP was at 18.4% with a target of 24.1%. The modernisation of the banking sector continues apace. SAMA’s regulations align with international standards such as Basel III. Moreover, SAMA was one of the first jurisdictions to adopt Basel III reforms in January 2023 to enhance the sector’s ability to withstand macroeconomic shocks and bolster its resilience. Thus, SAMA continues to be a regional leader in adopting the best standards.
Since January 2021 SAMA has been pursuing its Banking Policy Development Framework, an initiative that reviews and updates all banking sector regulations to bring them in line with international best practices. “Regulatory reforms and digital integration are reshaping how capital flows and investment products are delivered in the Kingdom,” Salam Al Khunaizi, CEO of BSF Capital, told OBG. “The outcome is a more efficient, transparent market that supports both domestic wealth creation and international participation.”
Key Actors
According to SAMA, there were 39 banks licensed in Saudi Arabia as of January 2026, of which 11 were local, four digital and 24 foreign, in addition to 85 finance companies. Of the local banks, four specialised in Islamic financial offerings: Alinma Bank, Al Rajhi Bank, Bank Al Bilad and Bank Al Jazira. All the other Saudi-based banks also had these financial products as well. In descending order, the five largest lenders by assets – were Al Rajhi Bank, Saudi National Bank (SNB), Riyad Bank, Saudi Awwal Bank (SAB) – a result of the 2021 merger between Saudi British Bank and Al Awwal Bank – and BSF. In the Middle East region, SNB is the third-largest and Al Rajhi fifth-largest lender. While banking employs a relatively small share of the workforce, the sector maintains one of the highest Saudiisation rates in the private economy, recorded at 77% at the end of 2022, underscoring its strategic importance in national employment policy.
Despite being the Kingdom’s largest bank, SNB had the second-largest branch network at the end of the third quarter of 2025, with 476 branches. Al Rajhi, in part due to its history as a money-changing enterprise, has the largest number of branches, with 510 during the period. However, SNB’s office number is trending upwards, while that of Al Rajhi is trending down. The majority of foreign banks, with the exception of National Bank of Kuwait (NBK), Gulf International Bank and Emirates NBD, only have one office in the country. The foreign banks operating in Saudi Arabia can be categorised into three areas: branches of Middle Eastern banks, such as Muscat Bank, NBK, National Bank of Bahrain and Bank of Jordan; branches of banks from countries that have large diasporas in Saudi Arabia, such as National Bank of Pakistan; and global players that need a local office to cater to Saudi Arabia’s high-net-worth-individual community and to facilitate local investment, such as UBS, JPMorganChase and BNP Paribas.
Of the Kingdom’s four licensed digital banks, three are in operation, and the most recent was licensed in September 2025. Saudi Arabia’s first digital bank, D360, is a PIF-backed venture and began its operations in December 2024. Vision Bank is a privately owned organisation, while STC Bank is owned by stc, which is also majority-owned by the PIF. EZ Bank, licensed in September 2025, is a joint venture between Qatar National Bank and Saudi investment organisation Ajlan and Brothers Holding. “The real transformation in banking is not just digital channels but the quality and timeliness of financial data available to businesses,” Ahmed Alhakbani, co-founder and CEO of Sifi, a corporate expense management platform, told OBG.
Credit Providers
Saudi Arabia also has four specialised credit institutions, which are government-backed funds that target specific sectors. By far the largest of these is the Real Estate Development Fund (REDF), which helps Saudi citizens pay home loans and renovations. The Saudi Industrial Development Fund is about one-third of the size of the REDF when calculated by loans given and disburses funding at below-market rates to companies that are helping Saudi Arabia’s diversification. The Social Development Bank helps with start-up and SME funding, as well as promotes financial literacy by embedding savings habits into daily life. Lastly, the Agricultural Development Fund (ADF) helps farmers, companies and foreign investors to apply for financial assistance. Overseen by the National Development Fund, the ADF launched SR2.5bn ($666.5m) in initiatives to support farmers and facilitate food imports in May 2020.
Performance & Growth
The banking sector’s total contribution to GDP has increased slightly in recent years. SAMA’s aggregated data saw finance, insurance and business services expand from SR122bn ($32.3bn) to SR135bn ($36bn) from 2020 to 2022 in inflation-adjusted terms. According to the 2025 financial stability report, total banking system asset growth outpaced its contribution to GDP, with assets growing by 13.6% to SR4.5bn ($1.2bn) in 2024, outpacing the 9.3% growth witnessed in 2023. “Saudi banks enter this phase of the cycle with strong capital positions and healthy liquidity, which has allowed the sector to continue expanding credit while maintaining prudent risk management,” Nadir Al Koraya, CEO of Riyad Bank, told OBG. “From a banking perspective, this balance has been essential in supporting private-sector growth as investment activity broadens beyond oil-linked segments.”
Real estate was a major driver for credit growth between 2019 and 2022 thanks to government initiatives to drive up homeownership rates, though this is expected to plateau in the second half of the 2020s. Instead, credit to non-financial corporations is expected to be the primary engine for growth in the upcoming years as non-oil industries in the Kingdom start picking up speed and some of the giga-projects, such as Qiddiya and Diriyah, are attracting significant capital investment. The sector’s total assets have grown from SR3trn ($794.4bn) in 2020 to approximately SR4.9trn ($1.3trn) by October 2025. Claims on the private sector are a major factor in this, going from SR1.8trn ($469.2bn) in 2020 to SR3.1trn ($826.5bn) in October 2025. Claims on government have also expanded, from SR517bn ($137.8bn) to SR895bn ($238.6bn), but the growth, in both percentage terms and absolute terms, is much smaller than growth in the private sector. This is a positive signal for Saudi Arabia’s privatisation initiatives and is also a stabilising influence on the banking sector, as the reliance on highly cyclical government spending declines.
SNB, the country’s largest lender, has seen growth, though more modest than other financial service providers have witnessed. SNB expanded from SR1trn ($266.7bn) 2023 to SR1.1trn ($293.2bn) in 2024. The bank’s net income also grew slightly, from SR20.1bn ($5.4bn) to SR21.1bn ($5.6bn). Al Rajhi’s growth was more notable, from SR808.1bn ($215.4bn) in 2023 to SR974.4bn ($259.8bn) in 2024, driven by a substantial growth in investment assets from SR133bn ($35.4bn) to SR175bn ($46.7bn) and financing assets – from SR594bn ($158.4bn) to SR693bn ($184.8bn). Al Rajhi Bank also saw a larger relative growth in net income compared to SNB, from SR16.6bn ($4.4bn) to SR19.7bn ($5.3bn).
The country’s third-largest lender, Riyad Bank, saw substantial asset growth, from SR386.8bn ($103.1bn) in 2023 to SR450.4bn ($120.1bn) in 2024. Unlike Al Rajhi’s expansion of investment, Riyad Bank’s main source of asset growth came from growing its loan portfolio from SR274.4bn ($73.2bn) to SR320.1bn ($85.3bn). However, its net income growth in both absolute and relative terms was smaller, rising from SR8bn ($2.1bn) in 2023 to SR9.3bn ($2.4bn) in 2024.
SAB had relatively modest asset growth compared to its peers, from SR356.6bn ($95.1bn) in 2023 to SR399.4bn ($106.5bn) in 2024, driven almost exclusively by a SR44bn ($11.7bn) increase in its loan portfolio. Despite its smaller asset size, it had comparable net income levels to Riyad Bank, growing from SR8.2bn ($2.2bn) to SR9.4bn ($2.5bn).
BSF, Saudi Arabia’s fifth-largest lender, saw assets increase from SR253.6bn ($67.6bn) to SR292.7bn ($78bn), similarly due to growth in its loan portfolio but also due a SR12bn ($3.2bn) increase in its investment portfolio. However, its performance in net income growth in percentage and absolute terms saw modest development, growing from SR4.2bn ($1.1bn) to SR4.5bn ($1.2bn).
However, overall Saudi Arabia’s banking sector is showing encouraging signs: sector-wide asset growth is strong, profitability is growing, albeit at inconsistent rates among banks, and private sector lending activity is increasing. Lending by economic activity is concentrated in individuals’ loans, which made up SR1.4trn ($373.2bn) out of the total SR3.2trn ($853.1bn) as of October 2025. However, individual loans have been among the fastest-growing sectors, as indicated by the financial results at each of the financial institutions, expanding by approximately 50% between 2021 and October 2025. Real estate is the second-largest lending sector, growing from SR158bn ($42.1bn) to SR382bn ($101.8bn) over the same period. In an indication of widespread national infrastructure upgrades and related to the rapid buildout of renewable energy, loans to the electricity and water sectors have more than doubled in the last four years, rising from SR92bn ($24.5bn) in 2021 to SR213bn ($56.8bn) in October 2025.
Other diversification-related sectors such as logistics, food and services, and IT have seen lending growth of around 70% over the same period. However, sectors such as mining and manufacturing, both of which are central targets of Vision 2030, have seen limited but notable growth of between 10% and 30%. One significant statistic is that credit card and consumer loans increased, from SR18.3bn in 2020 ($4.9bn) to SR33.4bn ($8.9bn) in the third quarter of 2025. Spending on renovation and home improvement dropped more than 60% in the period, while spending on tourism and travel doubled.
Digital Growth
The fintech sector has experienced substantial growth, outpacing that of the conventional financial sector. The number of fintech companies has grown well beyond the Vision 2030 target of 525 companies, and according to the 2024 FSDP annual report the fintech industry was responsible for creating more than 11,000 jobs – one-quarter of that of the conventional banking sector.
Several financial institutions have taken steps to capitalise on this growth. Riyad Bank has a subsidiary, 1957 Ventures, specifically focused on investing in and mentoring Saudi fintech companies. Al Rajhi Bank also has a subsidiary, Neotek, in the fintech space. SNB, SAB and BSF all have fintech-focused funds, but not dedicated fintech subsidiaries. “Fintech in MENA is not just about innovation; it’s about inclusion. Every new payment rail, wallet or regulatory framework should bring more people and businesses into the digital economy,” Muhannad Ebwini, CEO of Hyperpay, told OBG.
Outlook
The outlook of Saudi Arabia’s banking sector is positive. Foreign interest in the Kingdom remains high, and as the government pivots away from some of the more ambitious and capital-intensive giga-projects, more funding will be available for sectors such as energy and tourism where the return on investment is both more certain and on a shorter time horizon. Saudi banks are playing a growing role as lead underwriters and financiers for initial public offerings and debt issuances, roles in the past primarily given to foreign financial institutions.
The rapidly expanding fintech ecosystem is a boon for the Kingdom. A highly digitalised country with a relatively young population, Saudi Arabia can be a regional trendsetter in digital lending and online services, benefitting from a substantial domestic and cash-rich market. One potential benefit are the digitalisation initiatives and digital transformation that benefit the sector. While government exposure has recently declined, government funds and subsidies still bolster much of the Kingdom’s economic activity, particularly in times of fiscal recalibration.
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