Al Rajhi Bank reported a net profit of SAR 24.8 billion (about $6.6 billion) in 2025, up 26% year-on-year (YoY), alongside a 22% growth in operating income to SAR 39 billion (about $10.4 billion), driven by balance sheet expansion, margin improvement, and growth in non-financing income. Net interest income (NII) increased by 20%, supported by growth in earning assets and a three-basis point expansion in net interest margin (NIM) to 3.16%.

Waleed Al-Mogbel, CEO of Al Rajhi Bank, highlighted that 2025 marked the final year of the bank’s “Harmonise the group” strategy. “We will work on the new strategy at the beginning of the year. Starting with the business-to-consumer (B2C) pillar, retail cross-selling remains a key focus, as reflected in the increase in our products-per-customer ratio to around 45% since the launch of the strategy in early 2024.”

Non-financing income further supported earnings growth, driven by stronger cross-selling across the bank’s retail franchise. Fees and other income rose by 28%, with fee-based income up 25% and foreign exchange income increasing by 21%. Gains from the securitisation of retail assets boosted other operating income by 48%, supporting both revenue generation and balance sheet efficiency.

Maintaining asset quality and profitability

Asset quality remained healthy, with non-performing loan (NPL) improving marginally to 0.75% from 0.76% in 2024, reflecting stable credit performance across the portfolio. At the same time, the cost of risk (COR) remained at 0.32%, and provisioning coverage ratio (PCR) stood at 152%, reflecting a prudent risk profile. This supported strong profitability, with return on equity (ROE) at 23.4% and return on assets (ROA) at around 2.4%.

Impairment charges increased marginally to SAR 2.3 billion (about $610 million), while the cost of risk remained stable at approximately 32 basis points. Operating expenses increased by 14.5% driven by spending on technology, communication and IT software. Salaries increased by 8%, while depreciation rose by nearly 20%, partly due to the capitalisation of projects supporting future strategic initiatives. As a result, cost-to-income ratio (CIR) improved to 23.3%, down from 24.9% in 2024.

Abdulrahman Al-Fadda, chief financial officer of Al Rajhi Bank, attributed higher expenses to IT investments aimed at enhancing customer experience, digital capabilities and integration.

Balance sheet growth driven by lending, SMEs  and investment banking

Total assets increased by 7% to SAR 1.04 trillion (about $277 billion), supported by growth in the bank’s loan book across both retail and corporate segments. Loans expanded by 9% to SAR 753 billion (about $201 billion), with retail accounting for around 64% of the portfolio, , down from 80% in 2021, while corporate and small and medium-sized enterprises (SMEs) segments made up 36%, reflecting a gradual expansion into business lending.

Al-Mogbel noted that the corporate portfolio grew by 24% YoY to SAR 271 billion (approximately $72.3 billion), driven by wholesale lending and strong momentum in SME financing, which now represents 22% of the non-retail portfolio and around 8% of total financing, underscoring the bank’s push into higher-growth segments.

Customer deposits increased by 2% YoY to SAR 667 billion (about $178 billion), but fell 4% sequentially. Growth included SAR 12 billion (about $3.2 billion) in deposits, SAR 39 billion (about $10.4 billion) from sukuk and other funding sources, and SAR 15 billion (about $4.0 billion) in equity buildup in 2025. The liquidity coverage ratio (LCR) stood at 168.7% in the fourth quarter (Q4) of 2025, above the 100% regulatory requirement.

Investment banking supports growth

Investment banking and capital markets activities were an additional driver of growth, with revenues rising by approximately 270% since 2023, supported by Al Rajhi Capital. Growth was driven by stronger demand for advisory and underwriting services, alongside higher brokerage and capital markets activity supported by the bank’s large client base and cross-selling capabilities.

The investment portfolio stood at SAR 174 billion (about $46.4 billion), broadly stable YoY. A slight decline in Q4 reflected portfolio rebalancing, with Al-Fadda noting that the bank adjusted its portfolio “to take advantage of the interest rate environment.” The portfolio remains conservatively structured, with sukuk making up 87% of investments, 74% in fixed-rate instruments, and 83% concentrated domestically, supporting stable income and prudent risk management. This expansion aligns with the bank’s strategy to broaden its exposure beyond retail segments, while supporting economic activity in line with Saudi Arabia’s development agenda.

Capital strength supports shareholder distributions

The bank maintained capital ratios well above regulatory requirements, with a common equity tier 1 (CET1) ratio of 16.6%, a Tier 1 ratio of 20.5%, and a total capital ratio (TCR) of 21.9% as of year-end 2025. These levels remain higher than the minimum regulatory thresholds in Saudi Arabia of approximately 7.0% for CET1, 8.5% for Tier 1, and 10.5% for TCR. This level of capital strength supported continued shareholder distributions, with the bank’s board recommending a cash dividend of SAR 1.75 (about $0.47) per share for the second half of 2025.

Al-Mogbel highlighted plans to increase capital to SAR 60 billion (about $16.0 billion) from SAR 40 billion (about $10.7 billion), through the issuance of bonus shares, capitalising SAR 20 billion from retained earnings to strengthen the bank’s core capital base for long-term strategy execution.

Digital transformation drives efficiency and cross-selling

In 2025, digital channels handled 96% of transactions, lowering costs. Al Mogbel added that AI and data-driven activities are gaining momentum, with revenue generated from data-driven marketing increasing by almost 450% since 2023. Sales from target customer segments increased by around 340%, and multi-product customers rising from 38.0% in 2023 to 44.6% in 2025, highlighting stronger cross-selling and higher customer lifetime value.

Automation rose from 25% in 2023 to 60% in 2025, reducing manual costs and improving productivity. Meanwhile, cloud readiness increased from 29% to approximately 90% of IT infrastructure, enhancing scalability and enabling faster deployment of digital services. The number of application programming interfaces (APIs) expanded from 119 to 409, supporting ecosystem integration and new digital use cases.

These initiatives have strengthened integration, digital expansion and cross-selling, with the next phase set to build on them through ecosystem development, customer engagement and sustained growth.

Selective lending and balanced growth frame 2026 outlook

For 2026, financing growth is expected in the low-to-mid single-digit range,  reflecting a selective lending approach amid evolving liquidity. As Al-Fadda noted, “Our expectation is that credit demand in 2026 will be slower compared to historical levels.”

Profitability should remain resilient, with net profit margin rising 25 to 35 basis points. Al-Fadda said, “We are still geared for better margin expansion, given the healthy fixed-rate component of our total assets.”

ROE is expected above 23.5% and  CIR below 23%, while asset quality remains stable, with the COR at 30 to 40 basis points, and the TCR above 20%.

Growth will be led by non-retail segments, particularly SMEs, while retail lending continues steady expansion, albeit with a more selective approach, amid evolving liquidity conditions. Earnings are set to rely less on the rate cycle and more on balance sheet structure, funding mix, and yield optimisation, highlighting a transition toward a sustainable, efficiency-led growth model heading into 2026.