chief financial officer’s review of 2025 performance

An overview

Government-led economic diversification efforts across the Kingdom continued to gain momentum during 2025, reinforcing Saudi Arabia’s strong growth trajectory. The IMF maintained a positive outlook for the Saudi economy, projecting GDP growth of 4.5% in 2026. Economic activity accelerated during the year, with the economy expanding by 4.5% in 2025, supported by a 5.6% increase in oil sector activity alongside resilient performance across non-oil sectors. Consumer spending remained robust, rising by 10.7% in 2025, evidencing improving economic confidence and sustained domestic demand. The continued migration toward cashless transactions also progressed across the Kingdom, with digital payments accounting for approximately 66% of transactions, as individuals and businesses increasingly adopted technology-enabled payment solutions. Credit demand remained healthy, supported by Vision 2030 initiatives and a more accommodative interest-rate environment, with positive momentum expected to continue into 2026 and beyond.

Against this supportive macroeconomic backdrop, alrajhi bank delivered a strong performance across all business lines, driven by the continued execution of the “harmonize the group” strategy and a disciplined focus on value-driven growth. During the year, the bank surpassed the X 1 Tn. milestone in total assets in the first quarter, marking a significant achievement in our growth journey. The balance sheet expanded by 7.3% YoY, driven primarily by a 8.6% increase in the financing portfolio to X 753 Bn. Mortgage financing grew steadily and accounted for more than 36% of total financing and over 57% of the retail portfolio, while the non-retail book recorded strong growth of 24.1%, supported by continued expansion in corporate and SME financing. Profitability remained resilient, with net income reaching X 24.8 Bn., supported by balanced growth in net yield and fee-based income. Non-yield income represented approximately 24% of total operating income and, notably, exceeded total operating expenses during the year, reflecting the bank’s strategic emphasis on fee income generation and cross-sell across the group.

During 2025, the bank also executed strategic balance-sheet optimisation initiatives, including the securitisation of approximately X 10 Bn. in mortgage assets and nearly X 4 Bn. in consumer finance, supporting long-term profitability, liquidity, and capital efficiency. In line with balance-sheet growth, we continued to diversify our funding profile, successfully issuing USD 1.5 Bn. Tier 1 Sustainable Sukuk and a USD 1 Bn. Tier 2 Social Sukuk, which marked our first Tier 2 issuance in international markets. These issuances were carried out alongside increased utilisation of syndicated facilities and certificates of deposit amounting to more than USD 6.9 Bn. and USD 7.6 Bn. respectively, further strengthening funding flexibility and cost efficiency of the bank.

Income statement

Subsidiaries operating income for 2025

Group Operating Income Distribution Graph (Bank vs. Subsidiaries contribution)

Total operating income

alrajhi bank delivered a strong 22.0% growth in operating income, reaching X 39.1 Bn. in 2025. This growth was driven by a 20.1% YoY increase in net yield income resulting from stable margins, and healthy expansion in financing portfolios. It is noteworthy that non-yield income also maintained strong momentum, reflective of alrajhi bank’s management initiatives to boost fee-based revenue and the progress achieved under the “harmonize the group” strategy. These efforts delivered a 25.1% YoY increase in fee Income, which led to measurable improvements across several business lines including payments, trade, cash-management, bancassurance, and investment-banking and brokerage; digital and payments, wholesale, and brokerage recorded notable YoY growth of 29.8%, 35.9%, and 25.4% respectively.

Exchange income and other operating income rose by 20.6% and 48.4%, respectively. As a result of our strategy, we are focusing on further optimising our yield and non-yield income by cross selling our products, increasing the proportion of customers with more than one product to 44.6%, up from 38.0% in 2023.

Operating expenses

The bank’s operating expenses for the period increased to X 9.1 Bn., reflecting a YoY growth of 14.5%, broadly in line the bank’s balance sheet and high transaction volumes. A number of targeted strategic investments were also made during the year to support the delivery of ambitious KPIs under the bank’s “harmonize the group” strategy, contributing towards the operating expenses. The bank maintained strong cost discipline to deliver a market leading cost-to-income ratio of 23.3% for the period.

Impairment charges

In accordance with IFRS 9 requirements issued by the International Accounting Standards Board (IASB), we updated the bank’s “expected credit loss” (ECL) model for the recognition of impairment, taking into consideration the positive macroeconomic outlook for the Kingdom of Saudi Arabia. The net impairment charge for 2025 amounted to X 2.3 Bn., a YoY increase of 9.6% primarily attributable to the continued growth of the financing portfolio. Asset quality remained resilient, with the cost of risk maintained at 0.32% for the reporting period.

Profitability

alrajhi bank delivered the highest net income after Zakat since inception, reaching X 24.8 Bn. at the close of 2025, recording an outstanding growth of 25.7% YoY. The bank also continued to deliver industry-leading return metrics, with Return on Risk-Weighted Assets (RORWA) improving to 3.86%, Return on Assets (ROA) reaching 2.41%, and market-leading Return on Equity (ROE) of 23.36% for 2025.

Statement of financial position

* The bank has announced the Board of Directors’ recommendation to increase the bank's capital through the issuance of bonus shares, where shareholders will receive one bonus share for every two shares held, which will raise the bank's capital to X 60 Bn.

Assets

Marking a significant milestone in 2025, alrajhi bank surpassed the X 1 Tn. threshold in total assets, closing the year with assets amounting to X 1,043 Bn., which represented a 7.3% YoY increase. The bank’s asset quality remains healthy with 96.9% of our financing portfolio falling under the definition of stage 1 assets under the IFRS 9 classification. In addition, stage 2 and stage 3 exposures remained contained at 2.1% and 1.0% of the financing portfolio respectively.

Prudent risk management continued to support strong coverage levels, with stage 3 coverage at 55.5%, stage 2 coverage at 10.6%, and stage 1 ratio stable at 0.4%, all remaining above market average. This disciplined approach was further reflected in our sector-leading non-performing loan (NPL) ratio of 75 basis points, supported by a healthy NPL coverage ratio of 152%.

Deposits and other liabilities

Total liabilities of alrajhi bank reached X 900 Bn. at the close of the year, a YoY increase of 6.0%. Our customer deposits grew by X 12 Bn. during 2025 to X 667 Bn., a YoY growth of 1.9%. Demand and other deposits continued to dominate the mix, accounting for 64.8% of the overall customer deposits, while time deposits increased by X 41 Bn. Interbank borrowing decreased 0.3% YoY to reach X 117 Bn. Moreover, the bank continued diversifying the funding profile during the year by tapping in many alternatives tools such as Sukuks, Certificates of Deposits, Syndicated loan facilities resulting in an increase of X 42 Bn. in Debt Securities and Term Financing. It is worth mentioning that Syndicated loans now stand at X 26 Bn. comes from USD-denominated syndicated green loans, reinforcing the bank’s commitment towards meeting the growing appetite among consumers for sustainable, climate-linked financing instruments.

Stability

With a strong balance sheet backed by market-leading asset quality, healthy regulatory liquidity position and comfortable levels of capital ratios, alrajhi bank successfully maintained steady growth and consistent performance, demonstrating the stability, creditworthiness, and the continued confidence of shareholders in the bank.

Liquidity position

alrajhi bank retained a healthy liquidity position in 2025, with a Liquidity Coverage Ratio (LCR) of 168.7%, and a regulatory Loan-to-Deposit Ratio (LDR) of 82.8%. Our Net Stable Funding Ratio (NSFR) stood at 109.0%, comfortably above regulatory requirements. Additionally, alrajhi’s High-Quality Liquid Assets (HQLA) stood at X 127.3 Bn.

Capital position

alrajhi bank maintained a strong capital position in 2025, with a Tier 1 capital ratio of 20.5%, and a total capital adequacy ratio of 21.9%, well above regulatory requirements. Total regulatory capital reached X 147.3 Bn., of which 94% comprised Tier 1 capital, signifying the bank’s high-quality capital base. Our total Risk-Weighted Assets (RWA) increased by 10.2% YoY to X 673.9 Bn., mainly driven by growth in the financing book. Resulting in a 10.6% increase in Credit Risk RWAs. RWA density stands at 64.6%, compared to 62.9% recorded during the preceding financial year.

Strong profitability further supported capital strength, with return on assets (ROA) of 2.4%, and shareholders' return on equity (ROE) of 23.4%, and a market-leading return on risk weighted assets (RoRWA) of 3.86%. Notably, higher return metrices with improved RWA density have contributed effectively in our internal capital generation.

Strategic milestones and market recognition

At the onset of 2025, alrajhi bank surpassed the X 1 Tn. asset milestone, demonstrating sustained balance-sheet growth driven by healthy financing expansion, disciplined risk management, and strong customer confidence across our diversified business lines. In Q3 2025, alrajhi bank successfully issued a USD 1 Bn. Tier 2 Social Sukuk, marking our first Tier 2 issuance in international debt markets. The transaction strengthened our capital base, diversified funding sources, and reinforced the bank’s commitment to sustainable finance.

External ratings remain a critical indicator of alrajhi bank’s financial strength, sustainability performance, and credibility with investors and stakeholders. During 2025, MSCI upgraded our ESG rating to AA, placing the bank among the highest-rated corporates in Saudi Arabia and the GCC, acknowledging our continued progress in governance, social impact, risk management, and the integration of sustainability across operations. Fitch Ratings also upgraded the bank’s long-term issuer default rating in 2025 to ‘A’ from ‘A-’ with a Stable Outlook, recognising our strong profitability, resilient asset quality, robust capitalisation, and disciplined risk management framework.

In addition, alrajhi bank was awarded Best Investor Relations Team in Saudi Arabia, recognising the high standards of transparency, proactive engagement, and effective financial communication with investors, analysts, and broader stakeholder groups.