Al Rajhi Bank
1120.SR · Saudi Exchange (Tadawul) · Banks · Reporting currency SAR · As of 14 August 2026
The best bank in the Gulf, at a price that already knows it: a 22% return on equity is real, but so is the 3.2x book it costs.
Buy below SAR 52, or on proof that the through-cycle return on equity holds above 22%. Objective is a quality compounder over a three to five year holding period, with an allocation band of 3 to 6% as a core position.
| Metric | Value | Metric | Value |
|---|---|---|---|
| Market capitalisation | SAR 384bn | Price to book, Q1 2026 | 3.2x |
| Shares outstanding | 6.00bn (post-bonus) | Price to earnings, trailing | About 15.5x |
| Free float | Majority public; GOSI about 10% | Dividend yield | 2.6% |
| 52-week range | SAR 60.10 – 75.33 | Total capital ratio | 21.9% |
| Return on equity, 2025 | 21.9% | Cost-to-income, 2025 | 23.3% |
| Non-performing loans | 0.75%, covered 1.5x | Daily turnover | About USD 168m |
Source: Al Rajhi Bank FY2025 results and H1 2026 results released 28 July 2026 (Tier 1); Saudi Exchange and SAMA (Tier 2); StockAnalysis, MarketScreener and Argaam for price and peer data, early August 2026 (Tier 3 to 4). The riyal is pegged to the US dollar at 3.75.
Fair value from a residual income model, cross-checked against a justified price to book off sustainable return on equity. Anchor SAR 61, which is also the probability-weighted value of the scenarios. Calculated by the author.
Three reasons to own it
- A 22 to 23% return on equity on the cheapest funding in the Kingdom. Nearly double the sector's 15%, and about 69% of deposits pay no profit at all.
- Asset quality without peer. Non-performing loans at 0.75% of the book, covered 1.5 times, and a 23% cost-to-income ratio, the lowest in Saudi banking.
- Rare rate positioning. Funding reprices faster than the fixed-rate retail book, so falling rates widen this margin while most banks see theirs shrink.
Three major risks
- Valuation. At 3.2 times book the shares price in a 22% return holding for years. A fade to 18 or 19% as rates and mix normalise takes fair value below today's price.
- Concentration. One country, one economy, a retail book tied to Saudi jobs, wages and house prices. There is no geographic offset.
- Rate reversal. The 2023 squeeze showed a rate rise hurts this book more than peers'. A higher-for-longer path caps the margin recovery.
Business overview
Al Rajhi is a fully Shariah-compliant bank and the largest Islamic bank in the world by assets. It sells the use of money. It takes deposits from about 22 million customers, the largest customer base in Saudi Arabia, and lends that money out as home finance, car finance, personal finance and, increasingly, corporate and small-business finance. It earns the spread between the two, plus fees for cards, payments, remittances, brokerage and advice.
Because it is Islamic it does not charge interest. It uses murabaha, ijara and similar structures where the bank buys an asset and sells or leases it to the customer at a margin. The economics are the same as a conventional bank's: a yield on assets, a cost of funds, and a spread. The label matters for who can bank there, not for how the profit is made.
How it makes money
Two engines. The first and larger is net financing and investment income, the spread, which was SAR 29.8bn in 2025 and about three quarters of operating income. The second is fee and other income, SAR 9.2bn in 2025 and growing faster, from cards, foreign exchange, and a capital-markets arm whose revenue has risen about 270% since 2023.
Source: Al Rajhi Bank financial statements 2021 to 2025 (S&P Global Market Intelligence). SAR bn.
The funding advantage
The engine that makes the spread wide is the deposit base. Roughly 69% of customer deposits are non-profit-bearing current accounts: money that costs the bank close to nothing. Most banks pay up for deposits; Al Rajhi is handed them by a retail franchise built over decades. That is the single most important fact about the business. It is why the margin is high, why the return on equity is high, and why the shares are expensive.
| Driver | Level | Why it matters |
|---|---|---|
| Deposits that pay no profit | About 69% | The source of the whole margin advantage |
| Share of Saudi consumer finance | 39% | Scale in the segment with the best economics |
| Cost-to-income ratio | 23% | Lowest in the Kingdom; a compounding cost edge |
| Customers | About 22m | The largest base in Saudi Arabia |
| Net financing margin | About 3.2% | The spread itself, up in 2025 |
| Cost of risk | 0.33% of loans | Exceptionally low; financing volume grew 9% in 2025 |
Source: Al Rajhi Bank FY2025 results and Q1 2025 external factsheet. Operations outside Saudi Arabia, in Malaysia, Jordan and Kuwait, are small. This is a bet on the Saudi consumer and, increasingly, the Saudi corporate.
Industry and competitive position
Saudi banking assets exceed SAR 3.8 trillion, the largest system in the Gulf, and about three quarters of it is Shariah-compliant, making the Kingdom the world's biggest Islamic banking market. The sector grew with the economy: real GDP rose about 4.5% in 2025 and the IMF sees similar growth into 2027, led by non-oil activity under Vision 2030. Bank lending has tracked that, though retail mortgage growth has cooled from double digits to about 6%.
Al Rajhi is the second-largest Saudi bank by assets, behind Saudi National Bank, but the most profitable and the most valuable, at SAR 384bn of market capitalisation against SNB's roughly SAR 256bn. In retail it is dominant: about a 39% share of consumer finance and the largest branch, ATM and digital network in the country.
Approximate market data: Al Rajhi at close 13 August 2026, peers early August 2026 (StockAnalysis, MarketScreener, Argaam). Peer price to book derived from current price over latest reported book.
The moat
Al Rajhi has a genuine, narrow-to-wide moat and it rests on two things. The first is the low-cost deposit base: a structural funding advantage competitors cannot easily copy, because it was built on brand, branch density and the trust of a religiously observant retail customer over fifty years. The second is scale in a concentrated market, where the lowest cost-to-income ratio in the Kingdom at 23% is a cost advantage that compounds. The mechanism is switching costs plus scale economics, not a fashion that fades.
The honest test of pricing power is whether margins survive a cost shock. In 2022 to 2023, as global rates rose, Al Rajhi's funding cost climbed while its fixed-rate mortgage book could not reprice. The margin compressed and return on equity fell to about 18%. Pricing power is real but not unlimited: the franchise protects the funding cost, not the asset yield.
Regulation and disruption
The regulator is the Saudi Central Bank: a conservative regime of high capital minimums, close supervision, and a currency pegged to the dollar that ties policy to the US Federal Reserve. That peg is why a US rate decision reaches this income statement directly. A plausible hostile move, a cap on certain fees, would trim non-financing income at the margin rather than threaten the franchise.
Disruption risk is moderate. Fintech is chipping at payments and remittances, and the regulator is licensing digital banks. But deposits, capital and trust are hard to disrupt, and Al Rajhi is itself a digital leader with a net promoter score of 78. The larger long-run risk is not a new entrant; it is the maturing of the retail credit cycle that built the franchise. Moat verdict: narrow to wide, on funding cost and scale.
Financial performance
| SAR m, year to Dec | 2021 | 2022 | 2023 | 2024 | 2025 | 2026E | 2027E |
|---|---|---|---|---|---|---|---|
| Net financing and inv. income | 20,392 | 22,173 | 21,269 | 24,843 | 29,846 | 32,300 | 34,600 |
| Fee and other income | 5,324 | 6,402 | 6,262 | 7,212 | 9,248 | 10,000 | 11,000 |
| Total operating income | 25,716 | 28,575 | 27,531 | 32,055 | 39,094 | 42,300 | 45,600 |
| Operating expenses | (6,927) | (7,411) | (7,498) | (7,971) | (9,127) | (9,700) | (10,400) |
| Impairment charge | (2,345) | (2,001) | (1,504) | (2,117) | (2,320) | (2,900) | (3,200) |
| Net income to common | 14,746 | 16,954 | 15,800 | 18,686 | 23,415 | 26,100 | 28,400 |
| EPS (SAR) | 2.46 | 2.83 | 2.63 | 3.11 | 3.90 | 4.35 | 4.74 |
| Return on equity | 21.9% | 22.5% | 18.2% | 19.7% | 21.9% | About 22% | About 21% |
| Net financing margin | 3.1% | 3.3% | 3.0% | 3.1% | 3.2% | 3.3% | 3.2% |
| DPS (SAR) | – | 0.83 | 1.53 | 1.81 | 1.67 | 1.96 | 2.23 |
2021 to 2025 reported (S&P Global Market Intelligence and company). Per-share figures on the post-bonus 6.0bn share count and net of AT1 sukuk coupons; reported attributable net profit was SAR 24.8bn in 2025, up 26%. 2026E and 2027E are the author's estimates.
Reported to 2025, author's estimates thereafter. Net of AT1 sukuk coupons, which take about SAR 1.4bn a year before common shareholders are paid.
Cost of equity 10.5%, built in section 06. Return on equity net of AT1 coupons. Every year clears the charge for equity, which is the whole reason the shares carry a premium.
Quality of growth and earnings
The growth is earned, not bought. Almost all of it is organic: no large acquisitions, funded by a rising deposit base and a widening margin as rates fell in 2024 and 2025. The 2023 dip is the tell: when rates rose, the fixed-rate book could not keep up and profit fell 3%. That is the cyclicality hidden inside a smooth-looking record. Earnings quality is clean: impairments are conservative with coverage at 1.5 times, there are no unusual one-offs above 10% of profit, and reported profit converts to cash.
Balance sheet, capital and shareholder returns
| Measure | Now | Stressed | Regulatory floor |
|---|---|---|---|
| Cost of risk (impairments / loans) | 0.33% | About 1.0% | – |
| Implied return on equity | About 22% | Low double digit | – |
| Total capital ratio | 21.9% | Well above the floor | 10.5% |
| Tier 1 ratio | 20.5% | – | 8.5% |
| Non-performing loans | 0.75%, covered 1.5x | – | – |
Illustrative stress: impairments trebled to about 1% of loans, a level not seen in a decade. The bank stays profitable and well capitalised. SAMA minimums about 7.0% CET1, 8.5% Tier 1, 10.5% total. Source: Al Rajhi FY2025.
Credit quality is exceptional and the binding constraint here is not solvency; it is the concentration of the whole book in one economy. Two loan-to-deposit numbers get quoted and both are right. The headline ratio is about 113%, because the bank funds part of its book beyond customer deposits; on the regulator's own measure, which counts stable funding, it sits near 79%, below the sector, with ample liquidity. The 2025 sustainability-linked syndicated loan lengthened the funding profile. There is no wholesale-funding cliff and no covenant pressure.
In early 2026 the bank raised capital to SAR 60bn from SAR 40bn through a one-for-two bonus issue, capitalising SAR 20bn of retained earnings and lifting the share count from 4.0bn to 6.0bn. It is not a cash raise and does not change the value of a holding. Every per-share figure in this note is stated on the new 6.0bn basis so the history is comparable.
Dividends are paid twice a year and the 2025 payout was about 43% of earnings, leaving room to grow the balance sheet. Capital has gone into growing the loan book at high returns, into dividends, and into a fast-growing but small capital-markets arm. There have been no empire-building acquisitions and no buybacks above fair value, because there have been no buybacks.
Management, governance and capital allocation
| 2026 target set by management | Delivered, H1 2026 |
|---|---|
| Return on equity above 23.5% | 23.3%, broadly on track |
| Cost-to-income below 23% | Held below target |
| Tier 1 capital above 20% | Above 20%, comfortable |
| Net financing margin up 25 to 35 bps | Margin near a peak, defended by repricing |
| Financing growth low single digit | Trimmed from low-to-mid; value over volume |
Source: Al Rajhi Q4 2025 guidance and H1 2026 results, 28 July 2026. The one guidance cut was financing growth, as the bank chose value over volume and let some securitised assets run off. That is disciplined, not defensive.
| Item | Detail |
|---|---|
| Chairman | Abdullah bin Sulaiman Al Rajhi |
| Chief executive | Waleed Al-Mogbel, managing director |
| Board | Eleven directors, a blend of family and independent members |
| Largest institutional owner | General Organisation for Social Insurance, about 10% |
| Founding family | Retains significant blocks and board seats |
| Auditor | Ernst & Young |
| Shariah oversight | Independent Shariah board; 333 resolutions in 2025 |
Source: Al Rajhi Bank disclosures and Mubasher and Argaam company profiles, 2025 to 2026. Ownership percentages approximate.
Ownership is a strength here. A state pension fund and the founding family sit alongside a broad public float and a rising foreign institutional holding. There is no dual-class structure and no controlling shareholder able to override minorities. Related-party dealings exist, as at any family-linked bank, but are disclosed and modest. There are no restatements, qualifications or late filings, and the ESG rating has climbed from BBB in 2023 to AA by 2026. Governance is a reason to trust the numbers, not a reason to discount them.
Valuation
A bank is valued on its returns and its book, not on free cash flow, because debt is its raw material rather than its financing. The primary model here is residual income: the value the bank adds above a charge for the equity it uses. The cross-check is a justified price to book off sustainable return on equity. Both are driven by the same two numbers, and that is the point of the exercise.
| Metric | Current | Own 5-yr range | Peer median | Saudi market |
|---|---|---|---|---|
| Price / earnings, trailing | 15.5x | 16.7 to 24.0x | About 10x | About 18x |
| Price / book | 3.2x | 3.4 to 5.3x | About 1.4x | About 2.0x |
| Return on equity | About 22% | 18 to 23% | About 15% | – |
| Dividend yield | 2.6% | 1.3 to 2.9% | About 5.5% | About 3.5% |
Own range: year-end multiples 2021 to 2025, post-bonus. Peers and market: current data from StockAnalysis, Argaam and MarketScreener, early August 2026. No non-recurring items exceed 10% of earnings, so no normalisation is required.
The stock is cheap against its own history and expensive against everything else. At 3.2 times book it sits below its five-year average of about 3.7 times, but at more than double the peer median near 1.4 times, a premium of roughly 130% to the sector. One ratio never settles a bank; the return on equity does. The premium is not the anomaly; a 22% return against a 15% sector is. The question is how much of that return is permanent.
| Bank | Mkt cap SARbn | P/E | P/B | ROE | Div yld |
|---|---|---|---|---|---|
| Al Rajhi (1120) | 384 | 15.5x | 3.2x | About 22% | 2.6% |
| Saudi National Bank (1180) | 256 | 10.2x | 1.3x | About 13% | 5.4% |
| Alinma Bank (1150) | About 63 | 10.8x | 1.7x | About 16% | 4.0% |
| Riyad Bank (1010) | About 105 | About 10x | 1.4x | About 15% | 6.7% |
| Saudi Awwal Bank (1060) | 69 | 8.3x | 1.2x | About 13% | 6.2% |
| Banque Saudi Fransi (1050) | About 50 | 8.5x | 1.0x | About 12% | 6.8% |
Approximate market data: Al Rajhi at close 13 August 2026, peers early August 2026 (StockAnalysis, MarketScreener, Argaam). Return on equity on the FY2025 reported basis.
Alinma is the sharpest comparison: a fully Islamic bank earning about 16% on equity, priced at 1.7 times book and 11 times earnings, cheaper than Al Rajhi on every line. Al Rajhi's premium over it is defensible on the numbers, a 22% return against 16%, better funding and far greater scale, but the size of the gap is exactly the quality premium a buyer is paying today, and it is the row to argue about.
Assumptions
| Input | Value |
|---|---|
| Risk-free rate | 4.9% |
| Equity risk premium, Saudi Arabia | 6.0% |
| Beta, fundamental | 0.90 |
| Cost of equity | 10.5% |
| Return on equity, 2026E fading to terminal | 22% to 19% |
| Book value growth, near term | About 10% |
| Payout ratio, rising to | 45% to 55% |
| Terminal growth | 5.0% |
| Starting book value per share | SAR 20.13 |
Risk-free: Saudi 10-year USD sovereign under the riyal peg. Equity risk premium from Damodaran. Terminal growth near Saudi nominal GDP. On beta: the observed figure is unusable, reading 0.33 against one index and 1.13 against another, so a fundamental 0.90 is used and 0.7 to 1.1 is spanned in the sensitivity grid.
| Step | SAR per share |
|---|---|
| Starting book value per share | 20.13 |
| Plus present value of residual income, 2026 to 2030 | 13.2 |
| Plus present value of terminal residual income | 27.7 |
| Residual income value (anchor) | 61 |
| Cross-check: justified P/B 2.7x times book | 55 |
| Upper case: cost of equity 10%, terminal ROE 20% | 72 |
Residual income equals return on equity less the cost of equity, applied to opening book and discounted. The SAR 6 gap between the two methods is the value of Al Rajhi earning 22% for a few more years before it fades to 19%.
Where we differ from the street
Consensus is 10 buy and 6 hold with no sell, and a mean target near SAR 76, about 18% above the price. Our anchor of SAR 61 sits below the price. The whole gap comes from two inputs: the street appears to treat the bank's guided 23.5% return on equity as durable and to use a lower cost of equity via the low observed beta. Lower the cost of equity to 9.5% and hold the return at 20% and this model also prints in the high 70s. The reader is betting on those two numbers, nothing else. Note also that those targets are twelve month, while this note assumes a three to five year hold.
Fair value range SAR 54 to 72, anchored at SAR 61. Against a price of SAR 64.05 the shares trade about 5% above the anchor and in the upper half of the range. A 15% margin of safety, appropriate for a stable, high-return bank whose main risk is the multiple rather than the business, puts the preferred entry at about SAR 52. The stock is a wonderful business a little too dear, which is a WATCH, not a buy.
Catalysts, scenarios and sensitivity
| Event | Window | Direction | What it is worth |
|---|---|---|---|
| SAMA policy rate path, tracking the Fed under the peg | H2 2026 onward | Cuts help | A cut widens the margin here; guidance is no change to one hike, a mild headwind if it lands |
| Q3 2026 results | Late Oct 2026 | Watch | Confirms whether the H1 23% return on equity holds into a tougher second half |
| New group strategy | 2026 | Watch | Sets the growth and payout path for the next cycle |
| Corporate and SME lending push | 2026 to 2028 | Positive | Offsets a maturing retail book, but at lower margins |
| H2 2026 dividend declaration | Early 2027 | Positive | Payout has room to rise from about 43% of earnings |
Source: Al Rajhi Q4 2025 and H1 2026 results and guidance; SAMA. Rate direction under the riyal peg follows US policy.
Vertical marker = current price SAR 64.05
Bear: return on equity fades to 18%, rates stay high, the retail cycle turns and the multiple de-rates toward 2.5x. Base: return fades 22% to 19% with one to two cuts and low single digit growth. Bull: return holds near 20 to 21%, cuts land, corporate and SME re-accelerate and the multiple holds. Returns before the 2.6% dividend. Probability-weighted value SAR 61, which is the anchor.
| Cost of equity ↓ / terminal ROE → | 17% | 18% | 19% | 20% | 21% |
|---|---|---|---|---|---|
| 9.5% | 66 | 71 | 76 | 80 | 85 |
| 10.0% | 59 | 64 | 68 | 72 | 76 |
| 10.5% | 54 | 57 | 61 | 65 | 68 |
| 11.0% | 49 | 52 | 56 | 59 | 62 |
| 11.5% | 45 | 48 | 51 | 54 | 57 |
Terminal growth held at 5%. The base case is a 10.5% cost of equity and a 19% terminal return, which prints SAR 61. Move the cost of equity half a point, or the terminal return one point, and fair value swings SAR 5 to 8.
Everything rests on the cost of equity and the return on equity that survives the cycle. That is where any disagreement with this note should be aimed, not at the growth rate. Read the grid as a map of beliefs: the bulls live in the top right, paying today's price for a durable 20%-plus return and a low cost of equity; the bears in the bottom left. Today's price of SAR 64.05 clears only in the greener half.
The structural backdrop is supportive but not a rescue. Vision 2030 keeps non-oil GDP growing near 4 to 5%, which feeds corporate and project lending and, through it, deposits and fees. That is the offset to a retail mortgage engine cooling from double digits to about 6%. It does not, by itself, defend the return on equity, because corporate and SME lending carries a thinner margin than the retail book it is replacing. Growth and returns can move in opposite directions here, and the valuation cares about the second.
Risks and invalidation
| Risk | How it bites | Impact on value | What to watch | Severity |
|---|---|---|---|---|
| Multiple de-rating | Return normalises and 3.2x book falls toward the peer-justified 2.5 to 2.7x | −15 to −25% | Margin and return trend | High |
| Country concentration | One economy; a Saudi or oil shock lifts impairments and slows growth with no offset | −10 to −20% | Oil, non-oil GDP, jobs | High |
| Rates higher for longer | A 2023 replay: the fixed-rate book cannot reprice and the margin recovery stalls | −5 to −10% | SAIBOR, Fed path | Med-high |
| Retail credit cycle | The consumer and mortgage book seasons and cost of risk rises from 0.33% | −8 to −15% | NPL formation, stage 2 | Medium |
| Funding and liquidity | Financing has outrun deposits; a squeeze lifts funding cost and narrows the margin | −5 to −8% | Loan-to-deposit, deposit mix | Medium |
| Regulation and fees | Fee caps or higher capital requirements trim returns | Low single % | SAMA rulings | Low-med |
| Succession and key person | A leadership change could shift strategy or payout | Hard to size | Board and CEO changes | Low |
Author's assessment against Al Rajhi FY2025 and H1 2026 disclosure.
Bear case
The bear case is not a blow-up; it is a fade. The 22% return that justifies the premium is a peak, struck when falling rates flattered a low-cost-funded book. As rates settle, as the mix shifts from high-margin retail toward lower-margin corporate and SME, and as the retail credit cycle matures, the return drifts toward the high teens. The market, paying 3.2 times book for a 22% return, re-rates toward the 2.5 times it pays peers for 15%. Both the earnings and the multiple move the same way, and fair value falls to about SAR 50.
Bull case
The bull case is that the moat is underestimated. The 69% no-cost deposit base is structural, digital efficiency keeps the cost-to-income ratio near 23%, and the corporate, SME and capital-markets build-out replaces maturing retail growth without wrecking the margin. Rate cuts in late 2026 and 2027 widen the spread rather than narrow it, because funding reprices faster than the fixed book. The return holds near 20 to 21%, the multiple holds, and fair value reaches about SAR 75.
The rating becomes BUY below SAR 52, or if two or three quarters show the return on equity holding above 22% with a stable margin, which would lift the anchor above the price. It moves toward AVOID if the return on equity falls below 18% for two consecutive quarters, if non-performing loans breach 1.5%, or if the net financing margin drops below 3.0% and stays there.
Portfolio fit, entry and the decision
Al Rajhi is a core quality-compounder holding, not a trade. Liquidity is not the constraint: about USD 168m trades a day. The binding constraints are concentration and price. The role is a defensive, dividend-plus-growth anchor in Gulf financials, with no currency mismatch for a Gulf holder since the riyal is pegged to the dollar as the dinar is. It duplicates any existing Saudi or GCC bank exposure, so it earns a smaller slot than its quality alone suggests: a 3 to 6% core position, built only at the right price.
Be honest about the downside. The bear case implies a fall of about 22% from today's price, to around SAR 50, and the shares have swung more than 20% inside the last year. A holder must be able to sit through that without selling; if that is uncomfortable, the position is too big. The preferred entry is SAR 52 or below, the anchor less a 15% margin of safety, and a patient buyer can scale in below SAR 58 in tranches.
Between results, Q3 2026 in late October and then the full year in February, watch the three numbers the thesis rests on: the return on equity and whether it holds above 22%; the net financing margin and the no-cost deposit share, which is the moat; and the cost of risk and non-performing-loan formation, where a retail cycle would show first. Track the SAIBOR and the Fed path too, which set the margin.
| Test | Verdict | Note |
|---|---|---|
| Business is understandable | Pass | A deposit-funded Islamic lender |
| Moat identified | Pass | Low-cost funding, scale, switching costs |
| Balance sheet survives a downturn | Pass | 0.75% NPLs, 21.9% capital |
| Management trustworthy | Pass | Beats targets, clean audit |
| Earnings quality clean | Pass | Organic, well provisioned |
| Price below fair value less margin of safety | Fail | Trades about 5% above the anchor |
| Risks tolerable | Pass | Chiefly valuation, not solvency |
| Position can be sized | Pass | Ample liquidity |
Seven of eight boxes pass; the one that fails is price, and it carries the rating. WATCH, buy below SAR 52.
Basis, sources and Shariah status
Built from Al Rajhi Bank's FY2025 results released in February 2026, H1 2026 results released 28 July 2026, the Q4 2025 and H1 2026 investor presentations and earnings calls, and the FY2025 audited financial statements. Market data as of the close of 13 August 2026. The five-year financial history is cross-referenced against S&P Global Market Intelligence. Currency is SAR throughout, with dollar conversions at the 3.75 peg, and per-share figures are on the post-bonus 6.0bn share count.
| Source | Tier | Used for |
|---|---|---|
| Al Rajhi Bank results, presentations and calls, 2025 to H1 2026 | 1 | Financials, guidance, capital, asset quality, strategy |
| Al Rajhi Bank Q1 2025 external factsheet | 1 | Deposit mix, funding, network |
| Saudi Exchange (Tadawul) and SAMA | 2 | Listing, capital action, sector liquidity, policy rate |
| Argaam, AGBI, Asian Banker | 3 | Results reactions, peer data, dividends, consensus |
| Investing.com, MarketScreener, SimplyWall.st | 3–4 | Analyst distribution and targets, peer multiples |
| StockAnalysis.com (S&P Global data) | 4 | Five-year history, price, book value, ratios |
| Damodaran, NYU, country risk data | 3 | Equity risk premium input |
Shariah status
Al Rajhi is fully Shariah-compliant by construction, the largest Islamic bank in the world, with an independent Shariah board that issued 333 resolutions in 2025. It earns no conventional interest, passes the business-activity screen that excludes conventional banks, and is a standard constituent of Shariah equity indices. The purification requirement is minimal.
Limits of desk research
This is desk research on public disclosure. Beyond its scope, and where the remaining edge sits: the precise split of the loan book by segment and its margin by segment; the exact size and coupon schedule of the AT1 sukuk; current free-float and foreign-ownership percentages, which are stated approximately; and the durability of the low-cost deposit base under a prolonged rate shift, which is the central open question. Peer market caps and price-to-book figures are current-market approximations, and some analyst targets appear not fully adjusted for the bonus issue.
Al Rajhi Bank is the rare case where every business test passes and the price test does not. A 22% return on equity funded by deposits that cost nothing is a genuine, durable advantage, and it is already in the quote at 3.2 times book. The anchor of SAR 61 sits about 5% below the SAR 64.05 price, and the asymmetry runs the wrong way because the bear case moves earnings and the multiple together. WATCH, and buy below SAR 52.
This document is independent research prepared for informational purposes. It is not investment advice, not a recommendation to buy or sell any security, and does not constitute an offer or solicitation. Figures are drawn from public sources believed reliable as of the date shown and may change without notice. Anyone acting on this material does so at their own risk and should seek their own professional advice.