FAB Securities had listed Al Rajhi Bank, Saudi National Bank (SNB), and The Saudi Investment Bank (SAIB) as its favored banks among those under its coverage.
The brokerage gave an “accumulate” rating for Al Rajhi Bank, surging the target price by 13.3 percent to SAR110 per share. SNB and SAIB were assigned to “Buy” ratings, aiming prices of SAR47 (+22.5%) and SAR17.80 (+36.8 %).
Other banks that are covered are Alinma Bank, Bank Albilad, Arab National Bank, Banque Saudi Fransi, and Riyadh Bank. These banks were all given out “Buy” ratings and price growth targets.
FAB Securities indicated a report that the banking system of Saudi Arabia is also favourable due to a strong macroeconomic backdrop, continuous structural reforms, and a long-term credit demand.
The most recent changes in the White Land Tax should stimulate the rise in real estate development and housing supply, which will subsequently trickle down to more mortgage and construction-related lending.
The report stated that the introduction of a one percent countercyclical capital buffer, which the Saudi Central Bank (SAMA) has proposed to take effect in May 2026, is expected to encourage more conservative capital management in the short run, such as an increase in earnings retention, which can then moderate dividend payouts.
However, an increase in capital buffers would tend to improve balance sheet strength, lower the volatility in earnings, and promote more sustainable dividend payments in the medium term.
The FAB Securities said that the anticipated reduction in the rates by the US Federal Reserve and SAMA will see credit demand support, but margin pressure is projected to remain high in the fourth quarter of 2025 due to repricing lag and higher funding costs, and so the banks will need to prioritize repricing and efficiency of their funds and income diversification.
The banking sector in the Kingdom is estimated to witness robust expansion in the non-oil sector; total banking assets will grow 13.2 percent year-on-year to SAR 4.9 trillion in October 2025.
