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The Kingdom’s oldest bank grew loans 15% and deposits 21% in 2025 while launching Saudi Arabia’s first green mortgage — but with loan-to-deposit ratios across the sector now above 100%, the growth model faces a funding test.
A Century of Banking, a Year of Records
Saudi Awwal Bank reported net profit after zakat and income tax of SR8.45 billion for 2025, a 5% increase from the prior year and a fresh record for the institution that traces its roots to the Netherlands Trading Society’s Jeddah office in 1926. Total operating income rose 5% to SR14.7 billion, net loans surged 15% to SR299 billion and customer deposits jumped 21% to SR323 billion. Total equity expanded 14% to SR79 billion, with return on tangible equity at 14.5%. Chairwoman Lubna Olayan noted that revenues grew despite lower benchmark rates — a performance she attributed to disciplined execution of SAB’s transformation strategy.
SAB is 31%-owned by HSBC Group, a relationship that gives the Riyadh-headquartered lender access to HSBC’s global corporate network and a disproportionate share of multinational flows entering the Kingdom. The bank ranks as the fourth-largest in Saudi Arabia by loans and deposits, behind Saudi National Bank, Al Rajhi Bank and Riyad Bank, and operates over 100 branches with more than 5,400 employees. CEO Tony Cripps, who oversees the operational side, positioned SAB as a bridge between international capital and Saudi Arabia’s domestic transformation programme. Loan growth remained balanced between corporate and retail segments, with retail expanding slightly faster, supported by continued strength in the mortgage portfolio where SAB holds the third-largest share of REDF originations under Vision 2030’s homeownership drive.
Green Bonds and a Sector Under Pressure
SAB’s sustainability push was arguably the most distinctive feature of its 2025 results. The bank grew its sustainable finance portfolio to SR45 billion, exceeding its internal target, issued two green-labelled bonds totalling $1.9 billion, and launched Saudi Arabia’s first green mortgage product. MSCI upgraded SAB’s ESG rating to ‘A’, and the bank became the first in the Middle East and Africa to obtain ISO 20400 certification for sustainable procurement. The green bond issuance sits within a broader GCC trend: Fitch estimated that regional banks would issue more than $30 billion in dollar-denominated debt in 2025, following a record $42 billion in 2024, driven by maturing obligations, lower US rates and sustained Vision 2030-related credit demand.
That credit demand is precisely where the stress point lies. Saudi bank lending has consistently outpaced deposit growth, pushing the sector’s average loan-to-deposit ratio above 100% — a threshold that signals increasing competition for funding. SAB’s own figures reflect this dynamic: loans grew 15% but deposits grew 21%, temporarily easing its individual ratio, yet the sector as a whole faces tighter liquidity evidenced by elevated interbank spreads. Bank assets across the Kingdom exceeded SAR4.9 trillion by September 2025, growing 13% annually and far surpassing the Financial Sector Development Programme’s original target of SAR3.5 trillion. Non-performing loans across the sector remain below 1.2%, and capital adequacy stands at a comfortable 19.6%, but the sheer pace of credit expansion — corporate financing grew 19% in 2025, with real estate accounting for roughly a fifth of all corporate lending — has prompted the IMF to flag potential macrofinancial risks if the growth continues unchecked.
Vision 2030 as Banking Tailwind
SAB’s results sit within a broader Saudi banking boom. The Kingdom’s top ten listed banks posted aggregate profits of SR79.6 billion in 2024, up 13.8%, with Saudi National Bank and Al Rajhi together accounting for more than half. For 2025, S&P Global projected sector lending growth of around 10%, driven by corporate loans financing mega-projects and infrastructure investments from NEOM to the 2034 FIFA World Cup. Financial sector penetration still lags global standards, leaving structural room for growth supported by a young population, rising incomes and the Financial Sector Development Programme’s regulatory ambitions.
As SAB prepares to mark its centenary this year, Olayan framed the moment as a platform rather than a milestone, pointing to the bank’s diversified model, strong capital position and HSBC partnership as advantages for sustaining growth. The operational test in 2026 will be whether SAB can maintain its loan expansion without compressing margins further as benchmark rates continue to fall — a challenge shared by every Saudi lender navigating the tension between Vision 2030’s capital appetite and the realities of a shifting global rate environment.
Sources: Saudi Gazette, Pymnts, Middle East Eye
