Saudi Banking Industry-Critical Thinking


The banking industry is a massive segment of business and finance existing for more than thousands of years and playing an integral role in financial dealings and financial management. Its existence is based on a variety of its services of letting people invest, borrow and store money through a safe and sound medium. The banking industry allows people to keep a record of their accumulated money through withdrawals and deposits along with offering saving accounts as well which provides the people with an interest rate for their funds. For these services, Banks are operating over the world, often under a high amount of regulations by governments to prevent corruption and protect the money of the citizens. Combining with technological advancements and developments, the banking industry offers people the facilities of internet banking, ATMs, online transactions, and automated accessibility to their accounts (Teichova, et al., 1997).


Although economic crises are prevailing globally, yet the banking industry of Saudi Arabia is experiencing strong growth. The banking industry experiences high profitability, capitalization, and liquidity in 2012 and is on its way to sustainable growth by working on cost reduction, asset quality improvement, and the investment sector. The finance and banking division is managed by numerous government agencies like the economic policies are overseen by The Ministry of Finance, while The Saudi Arabian Monetary Association (SAMA) issues the nation’s currency, deals with fiscal policy, and manages the nation’s commercial banks (IMF Country Report, 2014). The banking industry of Saudi Arabia also offers Islamic banking services. Islamic banking is a banking system that is according to the principles of Islam (Shariah). These laws forbid usury, trading in financial risk, and the collection and payment of interest.

Currently, Saudi Arabia has a modernized banking system comprising 13 commercial banks operating nationally and internationally. These banks offer the services of retail and corporate banking, brokerage facilities, investment services, and derivative transactions along with ATMs, point of sale transactions, and credit cards. These banks include (1) Al Bilad Bank, (2) Al-Rajhi Bank, (3) Altima Bank, (4) Alinma Bank, (5) Arab National Bank, (6) National Commercial Bank, (7) Riyad bank, (8) Samba Bank, (9) Saudi British bank, (10) HSBC, (11) Saudi Hollandi, (12) Saudi Investment bank and (13) SIBC.  Among these banks, Al Rajhi serves as the market leader, followed by the other bands as shown in the graph below (market share is represented by the size of the ball presenting each bank):

Among these, the top five banks (as shown in the chart below) about the customer deposits make up 68.7% of the total market share with NCB being the market leader with 20.7% share, after that Al Rajhi owing 16.7%, Samba bank with 11.2%, Al Riyad bank capturing 11.0%, and Saudi British Bank with 9.1%. In terms of Loans market share, Al Rajhi leads the market with a market share of 17.1%, followed by NCB with 16.2% and RIBL with 11.7% (Alawi, 2013).



Established in 1975, today, Al Rajhi is the world’s largest Islamic bank with headquarter in Riyadh with six regional offices in Saudi Arabia. The bank is the main investor in the majority of businesses of Saudi Arabia and ranked amongst the largest cooperative stock companies in the Kingdom. (Al Rajhi Bank, 2014). The annual revenue of Al Rajhi Bank is projected to be around $3.39 billion, whereas the value of the whole company is approximately $29.59 billion. Recently, Al Rajhi Bank and Wipro Arabia Ltd. have jointly and effectively implemented Oracle FAHGL Program in which the legacy system is shifted and the new system allows more operational effectiveness at the bank particularly in the card business operations, treasury, and risk (Imran, 2014). Al Rajhi Bank had the finest cost to income ratio in 2012 of 27.0%, which means the company can generate high revenues with low cost as compared to its competitors, while the NPL ratio was 2% and have a CAR of 19.8%  showing a strong capitalization position in the market (IMF Country Report, 2014).


Established in 1980, Samba Financial Group is Saudi Arabia’s one of the biggest and extremely praised financial services groups with an unrivaled repute for carrying out the world’s best financial solutions. Since its beginning, Samba bank has been able to lead the industry through its competitive advantage of innovation and making a long record of industry initiatives and hence, playing a key role in transforming the banking industry of  Saudi Arabia into modern banking industry. In fact, Samba bank’s world-class services, market-leading products, and better-quality technology have made them one of the most successful financial services brands and the most internationally admired bank in Saudi Arabia and even the Middle East. Samba’s financial group’s annual revenue is approximately $1.74 billion whereas it has a market value of about $11.78 billion (, 2014).


Founded in 1957, Riyad Bank is also reputed as one of the main financial institutions of Saudi Arabia and is ranked as the third bank nationally about assets. The headquarter of the bank is in Riyadh. The bank has been offering basic banking and financial services to customers for more than 50 years, therefore, it is considered one of the most trusted banks nationally. Riyad bank’s yearly revenue is around $1.37 billion, while the bank’s market capitalization is roughly $9.68 billion. The government of Saudi Arabia owes 51% of the bank’s stock which is synchronized by the Saudi Arabian Monetary Association (Imran, 2014).

SABB_ Saudi British Bank:

The Saudi British Bank came into being in 1978 offering all kinds of financial and banking services. The bank is based in Riyadh and has an affiliated branch in London. Saudi British Bank is an affiliated firm of the HSBC Group and has a market capitalization of almost $8.61 billion whereas it generates yearly revenue of roughly $1.41 billion (SABB, 2015).


The amount of credits and lending in banks is increasing at a rapid pace by 16.7% in 2012 and is expected to grow at a rate of 13% annually from 2012-2017. These 13 Saudi Arabia’s key lenders’ profits increased by 7.18% in 2013, whereas the joint assets extended by over 9%, to a sum of $498.7 billion, and deposits improved by 10% to $389.3 billion. The profitability of the banking industry is expected to remain strong in the coming five years along with the industry and its players making initiatives to reduce its operating expenses for which the cost to income ratio is expected to be around 33%  (OBG, 2014). In this regard, the forecasted net profits are expected to increase at a rate of 11.5% by 2020.


Alawi, A., 2013. Saudi Banking Sector: Sector Report, s.l.: Al Jazira Capital.

IMF Country Report, 2014. SAUDI ARABIA 2014 ARTICLE IV CONSULTATION—STAFF REPORT; PRESS RELEASE, Washington, D.C.: International Monetary Fund.


OBG, 2014. Positive outlook for Saudi banks. oxford business group, 3 April.

Teichova, A., Hentenryk, G. K.-v. & Ziegler, D., 1997. Banking, Trade, and Industry: Europe, America, and Asia from the Thirteenth to the twentieth century. Melbourne, Australia: Cambridge university press.

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