aljazira bank (1020) Q2 2025 earnings summary

Executive summary

• Net income for H1 2025 reached 743 million, up 20% year-over-year, with Q2 net income at 382 million, a 6% sequential increase.

• Operating income grew 22% year-over-year to 2,181 million, driven by higher net financing/investment income (+21%) and fee/other income (+23%).

• Total assets rose 14% year-over-year to 157.6 billion, with financing up 19% and customer deposits up 16%.

• Transformation agenda advanced with digital onboarding, AI-driven efficiencies, and enhanced customer experience; digital penetration reached 82% and 64% of new accounts opened via mobile.

• The report covers the six months ended June 30, 2025, with consolidated, unaudited financials prepared under IFRS as adopted in Saudi Arabia.

Financial highlights

• Net income for H1 2025: 743 million (+20% YoY); Q2 net income: 382 million (+20% YoY, +6% QoQ).

• Operating income: 2,181 million (+22% YoY); net financing/investment income: 1,516 million (+21% YoY); fee and other income up 23% YoY.

• Operating expenses increased 14% YoY due to higher G&A and employee costs; cost-to-income ratio improved to 52.3% (down 3.6 p.p. YoY).

• EPS for H1 2025 improved, with ROAE at 8.19% and ROAA at 1.09%.

• Net margin increased by 14bps YoY to 2.17%, with normalized margin at 2.14% after adjusting for a one-off profit recognition.

Outlook and guidance

• FY25 guidance unchanged: financing growth expected in the lower teens, net margin to expand by 5-10bps, cost of risk to remain between 0.35-0.40%, and cost-to-income ratio targeted below 55%.

• Tier 1 ratio expected to exceed 16%, with ROAE targeted above 8%.

• Saudi GDP expected to grow 3.6% in 2025 and 3.9% in 2026, with non-oil GDP up 3.1% in 2025.

• Local economic activity remains resilient despite global uncertainties; strong demand for commercial lending expected.

• Anticipated interest rate cuts in 2025 could benefit margins.