Market Insights Financial Banking Traditional Banks

Traditional Commercial Banking - Saudi Arabia

Saudi Arabia

In Saudi Arabia, the Traditional Commercial Banking market market is anticipated to witness a significant growth in Net Interest Income, with a projected value of US$26.42bn by 2024.
This indicates a promising outlook for the banking sector in the country.
Looking ahead, the market is expected to maintain a steady annual growth rate of 3.98% (CAGR 2024-2029), leading to a substantial increase in Net Interest Income.
By 2029, the market volume is estimated to reach US$32.12bn.
It is worth noting that in a global context, China is expected to generate the highest Net Interest Income among all countries.
In 2024, China's Net Interest Income is projected to amount to US$1,444.0bn.
This indicates the significant scale and influence of the Chinese banking market.
In Saudi Arabia, traditional commercial banking is experiencing a shift towards digitalization and innovative fintech solutions.

Key regions: China, France, Brazil, Singapore, India

Definition:

Commercial banking refers to the financial services sector that provides a range of financial products and services to businesses, including small and large enterprises. Commercial banks offer services such as loans, lines of credit, and other financial products specifically designed for businesses. These services are critical to supporting the growth and development of businesses and the broader economy.
Commercial banks play a key role in the financial landscape by providing businesses with the funding they need to invest in new projects, hire employees, and expand their operations. They also offer a range of risk management services, such as trade financing and hedging solutions, to help businesses manage their financial risks.
The commercial banking market is highly competitive, with large global players as well as regional and local banks competing for business. Banks in this market are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Changes in regulations and the growing trend towards digitalization are also shaping the commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.
Overall, commercial banking provides a vital range of financial services to businesses and is critical to supporting the growth and development of the broader economy.

Structure:

The market data comprises Net Interest Income, the value of Deposits, the value of Loans, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the retail and commercial banking market, creating opportunities for new entrants and forcing existing players to adapt.

Key players in this market are companies such as Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

The Traditional Commercial Banking market in Saudi Arabia is experiencing a notable shift in customer preferences, market trends, and local special circumstances.

Customer preferences: Customers in the Traditional Commercial Banking market in Saudi Arabia are increasingly seeking digital banking solutions that offer convenience, efficiency, and security. The younger demographic, in particular, is driving the demand for online and mobile banking services, pushing banks to invest in digital transformation to meet these evolving preferences.

Trends in the market: One prominent trend in the Traditional Commercial Banking market in Saudi Arabia is the growing focus on Islamic banking products and services. As a country with a predominantly Muslim population, there is a strong demand for Sharia-compliant banking solutions. This has led to an expansion of Islamic banking offerings and a shift towards more ethical and interest-free financial products.

Local special circumstances: Saudi Arabia's Vision 2030 initiative, aimed at diversifying the economy and reducing dependence on oil, is playing a significant role in shaping the Traditional Commercial Banking market. The government's push towards economic transformation is driving innovation and growth in the banking sector, with an emphasis on supporting small and medium-sized enterprises (SMEs) and fostering entrepreneurship.

Underlying macroeconomic factors: The macroeconomic landscape in Saudi Arabia, including factors such as oil prices, government policies, and regulatory environment, plays a crucial role in shaping the Traditional Commercial Banking market. Economic stability, regulatory reforms, and government initiatives to promote financial inclusion are creating opportunities for banks to expand their services and reach a wider customer base. Additionally, the increasing competition in the market is prompting banks to differentiate themselves through innovative products and personalized services to attract and retain customers.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.