Determinants of profitability and financial performance: a study of listed Saudi banks

Objectives: The research study evaluates the financial performance and profitability of Saudi banks listed on the Saudi Stock Exchange using data from six years (2018–2023). The ten banks under consideration are evaluated by ratio analysis concerning profitability, operation efficiency, and solvency. Methods/Approach: The research study assesses the banks' performance, using ratio analysis to evaluate profitability, efficiency, and solvency, followed by regression analysis to uncover the relationships between key financial factors. Results: The findings of the ratio analysis highlight that RJHI and SNB possess better profitability and asset management than BSF and SAB, which show slightly higher volatility. The regression analysis reveals significant relationships, like equity levels negatively correlate with net income, while total liabilities and return on assets (ROA) positively impact profitability. Conversely, return on equity (ROE) demonstrates a negative relationship with net income, suggesting potential inefficiencies in equity utilization. Results align with Vision 2030, offering insights into key determinants of performance and contributing to strategies for sustainable banking practices in Saudi Arabia. Conclusions: This paper provides useful information regarding the financial assessment of the Saudi banking sector in terms of financial solvency and productivity.