Asset management leads the surge, while investment-banking revenues soar by 66%, bolstering Saudi Arabia’s financial sector amidst Vision 2030 reforms.

Saudi Arabia’s capital market institutions experienced a robust 27% increase in operating revenue during the second quarter of 2024, reaching SAR 4.1 billion ($1.1 billion), according to data released by the Capital Market Authority (CMA). The standout performer was asset management, contributing 31% of total revenue at SAR 1.28 billion—a 22% year-on-year rise.

Investment activities closely followed, generating SAR 1.21 billion or 30% of the revenue, despite a 15% decline from the previous year. Dealing activities posted SAR 603.67 million, accounting for 15% of income and marking a 22% year-on-year increase. Investment banking saw the highest growth, with revenues soaring 66% to SAR 406.18 million, comprising 10% of total revenue.

However, despite the rise in operating revenue, net profit dropped by 3% to SAR 2.05 billion due to increased non-operating expenses. On the trading front, the Saudi market dominated, with SAR 900.35 billion in traded value, representing 94% of the total, while the U.S. market accounted for just 6.1%.

The institutions’ total assets surged 29% year-on-year, reaching SAR 73.25 billion, while liabilities grew by 68.73%, totalling SAR 27.79 billion. Shareholders’ equity rose by 13%, reaching SAR 45.42 billion.

The CMA’s strategic plan for 2024-2026, unveiled during the September Debt Markets and Derivatives Forum in Riyadh, includes over 40 initiatives to enhance the debt market and asset management sector. These reforms aim to increase stock market value to 80.8% of Saudi Arabia’s GDP by 2025 and expand the debt market to 24.1% of GDP.

Analysis:

Economic Perspective: The 27% surge in revenue reflects the growing strength and diversification of Saudi Arabia’s financial sector, a core goal of Vision 2030. The increase in asset management revenues highlights investor confidence, while the rise in liabilities signals increased borrowing activity, likely to support expansion and reform initiatives.

Geopolitical and Global Context: Saudi capital markets have remained resilient in the face of global economic challenges, including inflation and geopolitical instability. The kingdom’s stock market growth and increasing foreign investment position it as a major player in the global financial ecosystem.

Future Outlook: The CMA’s strategic reforms and initiatives focused on transparency, fintech growth, and international investor attraction are expected to cement Saudi Arabia’s position as a global financial hub. These steps align with the broader Vision 2030 goals of economic diversification and reducing dependency on oil.