Saudi Arabia's bank credit growth slowed to 0.7% month-on-month in January, below the 1.2% average expansion typically seen in the month over the past four years, according to a report by regional financial powerhouse Al Rajhi Capital.

On an annual basis, credit expanded 10.4%, implying annualised growth of 8.4%, broadly in line with most banks’ guidance for fiscal year 2026. Retail lending rose 0.8% month-on-month and 5.1% year-on-year, outpacing corporate lending, which increased 0.6% on the month and 14.9% from a year earlier.

Mortgage originations recovered to SAR6.2 billion ($1.65 billion) in January, up 11.6% from the previous month but down 40.9% year-on-year. The figure was higher than the second half of 2025 average of 5.6 billion riyals, but remained below the 2025 full-year average of SAR6.7 billion.

Deposits grew faster than credit, rising 1.6% month-on-month. The increase was driven by a 6.9% expansion in quasi deposits and 1% growth in both demand and time deposits. Government-related balances led demand deposit growth with a 2.4% monthly rise, while private sector balances drove time deposit growth, also up 2.4% on the month.

On an annual basis, total deposits increased 8.8%, supported mainly by a 20.5% surge in time deposits. Although the share of time deposits in total funding edged down 20 basis points month-on-month, it remained elevated at 39.9%.

As deposits outpaced lending, the simple loan-to-deposit ratio fell by 101 basis points month-on-month to 111.7%, while the adjusted ratio declined 72 basis points to 79.6%. Liquidity conditions, however, remained tight, with the average spread between SAIBOR and term SOFR at 119 basis points in January and 118 basis points in February.

Consumer spending, including point-of-sale transactions, cash withdrawals and e-commerce, rose 3.3% month-on-month and 11.3% year-on-year to 141.3 billion riyals in January, compared with 5.9% monthly and 8.9% annual growth in December. 

E-commerce transactions increased 4.7% on the month and 56.2% from a year earlier, lifting their share of total consumer spending to around 23%, up from 16% in January 2025.

Bank profitability moderated, with profit before zakat and tax rising 4.8% year-on-year to 8.5 billion riyals in January, slower than December’s 9.4% growth and below the 16% increase recorded for full-year 2025.

The credit growth in Saudi Arabia for January grew by just 0.7% m-o-m (+10.4% y-o-y), versus average growth of 1.2% m-o-m seen in the month of January during the last 4 years, according to a report by the kingdom's central bank SAMA. 

Annualised growth implies 8.4%, broadly in line with the FY26 guidance from most of the banks. Retail loans (+0.8% m-o-m, +5.1% y-o-y) outgrew corporate loans (+0.6% m-o-m, and 14.9% y-o-y).

On mortgage, the SAMA report said the monthly originations recovered to SAR6.2 billion (+11.6% m-o-m and -40.9% y-o-y), versus H2 2025’s average of SAR5.6 billion, but still below the FY 2025 average of SAR 6.7 billion.

Deposits: Total deposits, outpaced credit growth, +1.6% m-o-m, led by quasi deposits (+6.9% m-o-m) as well as 1% m-o-m growth in both demand and time deposits. Bulk of the growth in demand deposits was led by government (+2.4% m-o-m), while within time deposits, private deposits grew the most by 2.4% m-o-m. 

Overall, on a y-o-y basis, total deposits were up 8.8%, mainly led by time deposits (+20.5% y-o-y). The mix of time deposits, though declined 20bps mo-m, remained elevated at 39.9%.