Banque Saudi Fransi (1050) Q1 2026 earnings summary

Executive summary

• Net income for Q1 2026 grew 3.2% year-over-year to SAR 1,381 million, driven by higher operating income, improved cost of risk, and lower impairments.

• Loans and advances increased 6% year-over-year, with both commercial and consumer portfolios contributing; mortgages led consumer growth.

• Customer deposits rose 5% year-over-year, with a notable improvement in non-interest-bearing deposit mix.

• Operating income increased 3% year-over-year to SAR 2,708 million, with net interest income up 5% and non-interest income down 5%.

• The bank remains focused on executing its 2030 strategy, emphasizing operational efficiency, digital transformation, and sustainable ROE expansion above 15%.

Financial highlights

• Net income up 3.2% year-over-year to SAR 1,381 million; sequentially, net income grew 10% quarter-over-quarter.

• Net interest income rose 5% year-over-year to SAR 2,217 million, driven by 7% growth in average interest-earning assets, despite a 7 bps margin decline.

• Non-interest income declined 5% year-over-year due to lower fee and commission income, partially offset by higher investment income.

• Operating expenses increased 6% year-over-year to SAR 922 million, mainly from higher staff costs and depreciation linked to transformation projects.

• Cost-to-income ratio at 34.1%, above the sub-33% target, but expected to trend lower as operating leverage builds.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: high single-digit loan growth, NIM around 3%, cost of risk 45–55 bps, cost-to-income ratio below 33%, and ROE of 12–13%.

• Return on equity guidance maintained at 12–13%; CET1 ratio expected to stay above 15%.

• The bank continues to monitor geopolitical risks in the Middle East, with ongoing stress-testing and scenario analysis for credit and liquidity impacts.

• No overlays taken for provisions in Q1; ongoing monitoring of geopolitical risks and supply chain disruptions.

• Positive outlook supported by sustained loan growth, resilient margins, and efficiency gains.