business portfolio review

MSME business

The small and medium enterprise (SME) sector of Saudi Arabia continued to expand in 2025, supported by strong government initiatives and financing reforms. The number of active commercial registrations of SMEs has reached 1.7 Mn. at the end of Q2 2025, as per the Small and Medium Enterprise General Authority of Saudi Arabia – Monsha’at, a clear indication that private sector activity continues to power the Kingdom’s non-oil GDP. The SME sector also continued to promote entrepreneurship across the Kingdom with 47% of all active registrations being female-owned companies, and youth-owned commercial registrations reaching an equally impressive 38%. Lending to small, medium and micro enterprises also surged in 2025 by a remarkable 37% YoY by the end of the second quarter, reaching a record X 420.7 Bn. signalling increasing formal-sector financial support for MSMEs.

Supporting MSME growth across sectors

Alrajhi bank continued to enable MSME development by offering sector-specific, digital financing solutions designed around the evolving needs of micro, small and medium enterprises. In 2025, the bank introduced a dedicated lending programme for the contracting and construction sectors, addressing increased demand from SMEs participating in infrastructure, housing, and giga-project supply chains across the Kingdom. This solution streamlined the end-to-end credit journey, shortened processing times, and provided contractors with easier access to working capital and project-financing tools.

Enhancements were carried out on alrajhi bank’s property-backed SME financing solution Tharwa by upgrading credit policy and digital workflows to accelerate approval decisions and improve customer experience. These improvements allowed more SMEs to leverage real-estate assets to fund business expansion and cash-flow needs.

During 2025, our MSME portfolio (inclusive of medium-sized enterprises) successfully grew 50% from X 39.0 Bn. in 2024 to reach X 58.7 Bn. at the close of the year, with a steadily increasing market share.

Qualitative disclosure of micro, small and medium enterprise for financial services

The approved definition of micro, small and medium enterprises and initiatives adopted by the bank follows the classifications published by Monsha’at:

Under this classification, we serve businesses classified as ‘Micro’ through structured lending products offered by our dedicated Micro and Small Business (MSB) Unit, and collectively serve businesses classified as ‘Small’ and ‘Medium’ through our SME Unit, both under the Corporate Banking Group. Lending policies for both groups are based on their varying financing requirements.

We routinely monitor the progress and growth of MSB clients, to better service them in terms of products, and cross sell relevant financing solutions as businesses show the potential to transition through the categorisation as they scale up.

Strengthening product penetration and fee-based income

The MSME business continued to increase fee-based income by deepening product penetration, while utilising enhanced data insights to convert non-borrowing clients into borrowing customers. The dedicated MSB and SME call centres further strengthened service quality, offering customer support through dedicated toll-free lines.

Digital sales and financing products remained a core growth driver during the reporting period. Product enhancements and automation initiatives helped reduce turnaround times, improve customer experience, and contribute to overall revenue uplift. In 2025, the bank also delivered critical upgrades to the ACP system and SME credit-approval workflow, strengthening operational efficiency and accelerating decision-making across the portfolio.

Collective group synergies continued to be leveraged to deliver a unique value proposition for MSME businesses that go beyond financial support at market entry. Our SME bundled solution comprises a comprehensive suite of non-financial services; from payment solutions, eCommerce and marketplace access, to payroll services, fintech solutions, and advisory support.

Advancing digital financing solutions

The POS financing workflow underwent several enhancements in 2025, with optimised application and approval processes greatly reducing preparation time and enabling faster access to funding. These improvements resulted in an X 300 Mn. YoY increase in POS financing, demonstrating strong customer demand for digitally delivered working-capital solutions. We maintained our leading POS position in the Kingdom with 43.5% market share in physical POS terminals, allowing us to offer financing solutions against cash flows, thereby maintaining strong MSME portfolio quality with reduced levels of risk.

Further operational improvements were introduced in the Letters of Guarantee (LG) service, where turnaround time was substantially reduced from seven working days, improving client experience and supporting businesses engaged in government and private-sector contracting.

Aligning with Vision 2030

We continued to align with Vision 2030 objectives during the year in review, expanding the MSME lending portfolio to support entrepreneurship, encourage female participation in the economy, enable job creation, and boost non-oil GDP.

The bank facilitated over X 1.8 Bn. in funding to 434 clients in 2025 through the Ministry of Finance’s Kafalah Loan Guarantee Programme, enabling SME’s with limited collateral to secure credit through government-backed guarantees.

In November 2025, alrajhi bank participated as the Main Sponsor of Biban 2025 organised by Monsha’at, reaffirming its position as a key enabler of Saudi Arabia’s entrepreneurial ecosystem, and the Kingdom’s broader Vision 2030 agenda. During the event, alrajhi bank signed an X 4 Bn. financing agreement with Monsha’at, to expand innovative funding instruments and sector-specific lending solutions, improving access to diverse working capital sources and growth funding.

The bank also signed a credit facility agreement with the National Development Fund (NDF) in July 2025, bolstering development projects across the Kingdom through the NDF’s 12 affiliated entities (including the Small and Medium Enterprise Bank) to achieve national transformation goals.

The SME Unit’s continued commitment to financing emerging non-oil sectors earned alrajhi bank two distinctions at the Biban 2025 Forum; the Cultural Sector Support Award and the Entertainment Sector Support Award, recognising the bank’s strong performance in enabling growth across high-potential industries.