Saudi Arabia Retail Banking Market Size
|Study Period:||2019 - 2028|
*Disclaimer: Major Players sorted in no particular order
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Saudi Arabia Retail Banking Market Analysis
Saudi Arabia Retail Banking Market is expected to achieve a CAGR of 6% during the forecast period. The impact of the COVID-19 pandemic on Saudi Arabian banks has been contained, while pressures on the operating environment have eased, and the economic activity is gradually recovering, supported by higher oil prices.
Retail banking volumes are high in Saudi Arabia, and the market provides customers with a full range of financial products. This market grew by 6.3% Y-o-Y for the first nine months of 2021 to SAR 10.54 billion (USD 2.80 billion), while its net income decreased slightly by 3.2% Y-o-Y to SAR 4.5 billion (USD 1.20 billion). Meanwhile, in the third quarter, the net income of the retail banking market increased to SAR 1.36 billion (USD 0.36 billion), registering an increase of 22.9% Y-o-Y.
Retail lending has been a high-growth segment in Saudi Arabia in recent years and a key driver behind the banking sector’s growth. While it mitigated the impact of the COVID-19 pandemic on Saudi Arabian banks' financial profiles, risks are emerging. Retail lending has historically been ignored by many Saudi Arabian banks but has expanded significantly recently and is now the primary engine of credit growth. The fast growth in this segment is expected to continue, underpinned by strong credit demand and support from government authorities. Various factors support the high growth, including strong margins on retail products and the Saudi government placing homeownership at the center of its Vision 2030 strategic plans. This has led to vast programs of government subsidies that boost margins and guarantees for retail mortgages.
Returns on retail portfolios are underpinned by unusually low funding costs, with retail loans largely funded by retail non-interest-bearing deposits (NIBs). The absence of caps on retail loan pricing also contributes to high margins. Therefore, banks with a more significant amount of retail lending have profitability metrics registering at the higher end. Saudi banks have been actively chasing retail lending, adjusting their strategies, and increasing their appetite for this segment.
Saudi Arabia Retail Banking Industry Segmentation
Retail banking, also known as consumer banking, includes the provision of services such as transactional and savings accounts, personal loans, mortgages, credit and debit cards, and others to the general public by banking institutions. A complete background analysis of the Saudi Arabian retail banking market is covered in the report, including an assessment of the parental market, emerging trends by segments and regional markets, significant changes in market dynamics, and a market overview. Saudi Arabia Retail Banking Market is Segmented by Product (Transactional Accounts, Savings Accounts, Debit Cards, Credit Cards, Loans, and Other Products), Industry (Hardware, Software, and Services), and Channel (Direct Sales and Distributor). The report offers market size and forecasts for Saudi Arabia Retail Banking Market in value (USD billion) for all the above segments.
Saudi Arabia Retail Banking Market Trends
This section covers the major market trends shaping the Saudi Arabia Retail Banking Market according to our research experts:
Increase in Saudi Retail Mortgage Loans Driving the Market
Mortgage loans provided to retail and corporate clients by commercial banks in Saudi Arabia rose 36% Y-o-Y to SAR 533.5 billion (USD 141.9 billion) in Q3 2021 from SAR 392.1 billion (USD 104.3 billion) in the same period in the previous year, according to data issued by the Saudi Central Bank (SAMA). The huge increase in demand for mortgages is part of the Saudi government’s aim to increase homeownership in the country to 70% as part of its Vision 2030 targets, up from 50% in 2018.
Loans to retail clients, which account for 77% of total mortgage loans, jumped 48% to SAR 412.6 billion (USD 109.7 billion) in three months from SAR 279.2 billion (USD 74.2 billion) in Q3 2020. Corporate loans grew by 7% Y-o-Y to SAR 120.8 billion (USD 32.1 billion) in Q3 2021.
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Rising Digitalization in Saudi Arabian Banking Sector is Driving the Market
The move towards digitalization was most evident in the granting of licenses to the two first fully digital banks in Saudi Arabia in 2020. The move included Saudi Telecom’s STC Pay being renamed STC Bank with a capital of SAR 2.5 billion (USD 0.67 billion) and Saudi Digital Bank (SDB) gaining a capital of SAR 1.5 billion (USD 0.4 billion). These new licenses embody the country’s desire to become a financial hub and increase the efficiency and penetration of its banking system. The impact of these digital banks is hard to gauge, but it is safe to assume that they will be appealing to the underbanked areas of Saudi Arabia, where established banks have few or no branches. With bank penetration at 72% but internet penetration forecast to reach 97% in 2025, digital banks have a clear target audience. Their sector-wide significance will likely come from spurring innovation among the country’s older banks and ensuring Saudi Arabian society is at the forefront of advancements within the (digital) financial system. STC Pay and SDB will fall under the same regulatory framework as other Saudi Arabian banks.
Saudi Arabia Retail Banking Industry Overview
The report covers major international players operating in the Saudi Arabian retail banking market. In terms of market share, a few major players currently dominate the market. However, with technological advancements and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and tapping new markets. Companies including Al Rajhi Bank, Saudi National Bank, National Commercial Bank, Alinma Bank, Saudi British Bank, and others have been profiled in the report.
Saudi Arabia Retail Banking Market Leaders
Saudi British Bank
*Disclaimer: Major Players sorted in no particular order
Saudi Arabia Retail Banking Market News
- In February 2022, The Ministry of Municipal and Rural Affairs and Housing honored the Saudi National Bank for its efforts in serving the housing sector within the donor community after the bank announced the completion of the delivery of its community housing initiative, which resulted in the provision of 500 housing units to the beneficiaries of the housing development program from 2017 to 2021, including 361 fully-furnished housing units and 139 housing units, supported by purchasing cards.
- In January 2022, Saudi National Bank announced the completion of the merger between Samba Financial Group and NCB, which is the fastest and largest merger in the history of Saudi Arabia. The merger resulted in the establishment of the largest banking entity in Saudi Arabia with assets of more than USD 239.7 billion.
Saudi Arabia Retail Banking Market Report - Table of Contents
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Market Opportunities
4.5 Porter's Five Forces Analysis
4.6 Impact of Government Regulations on the Market
4.7 Impact of Technological Advancements on the Market
4.8 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Product
5.1.1 Transactional Accounts
5.1.2 Savings Accounts
5.1.3 Debit Cards
5.1.4 Credit Cards
5.1.6 Other Products
5.2 By Industry
5.3 By Channel
5.3.1 Direct Sales
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 National Commercial Bank
6.2.2 Alinma Bank
6.2.3 Saudi British Bank
6.2.4 Riyad Bank
6.2.5 Banque Saudi Fransi
6.2.6 Arab National Bank
6.2.7 Saudi Investment Bank
6.2.8 Alawwal Bank
6.2.9 Saudi National Bank
6.2.10 Al Rajhi Bank*
- *List Not Exhaustive
7. INVESTMENT ANALYSIS ON THE SAUDI ARABIAN RETAIL BANKING MARKET
8. FUTURE OF THE SAUDI ARABIAN RETAIL BANKING MARKET
Saudi Arabia Retail Banking Market Research FAQs
What is the study period of this market?
The Saudi Arabia Retail Banking Market is studied from 2019 - 2028.
What is the growth rate of Saudi Arabia Retail Banking Market?
The Saudi Arabia Retail Banking Market is growing at a CAGR of 6% over the next 5 years.
Who are the key players in Saudi Arabia Retail Banking Market?
Al-Rajhi Bank, Alinma Bank, Saudi British Bank, Riyad Bank, SNB are the major companies operating in Saudi Arabia Retail Banking Market.
Saudi Arabia Retail Banking Industry Report
Statistics for the 2023 Saudi Arabia Retail Banking market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Saudi Arabia Retail Banking analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.