AlJazira Capital forecasts Al Rajhi Bank Q2 profit above SAR 3.4B, above SICO's estimate. The print due mid-July will test whether Saudi banks are past margin compression.
Alpha Score of 26 reflects poor overall profile with weak momentum, poor value, moderate quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
AlJazira Capital issued Q2 2026 earnings forecasts for a dozen Saudi banks and companies under coverage, with Al Rajhi Bank (1120) pegged for a sequential profit gain. The brokerage expects the lender to report net income above SAR 3.4 billion, up from SAR 3.09 billion in Q1, driven by higher net interest income and lower provisioning.
The note, released Monday, covers names across banking, petrochemicals, and telecoms. For Al Rajhi, the estimate sits above a separate projection from SICO, which put Q2 profit at SAR 3.34 billion. A beat would reinforce the view that Saudi lenders are past the worst of margin compression from the rate-cutting cycle.
The simple read: The forecasts give traders a direct comp for the upcoming earnings prints. If Al Rajhi matches or beats the number, it builds momentum for the sector. A miss could spill into other banks.
The better read: The real signal is in which line items AlJazira Capital expects to drive the improvement. Higher net interest income suggests loan growth is still running above deposit growth, meaning net interest margins are expanding. Lower provisioning points to a stable credit cycle, with non-performing loans not rising. That combination–top-line growth and falling credit costs–is exactly what positions the sector for a rerating.
Seasonality matters here. Q2 often sees a seasonal lift in retail lending and consumer spending ahead of summer and Hajj. AlJazira Capital's forecasts may be pricing in that effect. The risk is that the boost is temporary and Q3 sees a payback, a pattern seen in previous years.
For other banks under coverage, the broker likely expects similar dynamics: stable NIMs and low provisions. Saudi banks have benefited from a high-rate environment that is only now easing. The first rate cut in March already pressured margins for some lenders. Q2 might be the quarter where banks show they can manage the transition without a sharp profit drop.
On the company side, AlJazira Capital's coverage includes industrial names that could benefit from lower rates and higher government spending. The earnings visibility for non-financials is lower, given global demand uncertainty. Those forecasts will be more volatile.
The actual Al Rajhi Q2 print is due in mid-July. That date is the next concrete catalyst for the stock and for the sector ETF. A beat would lift the whole banking index. A miss would raise questions about the sector's earnings resilience.
The backup case is straightforward. If the economy slows faster than the Saudi central bank's forecasts, loan growth could stall and provisioning could rise. AlJazira Capital's estimates assume a stable macro backdrop. Any hawkish surprise from the Fed that delays further Saudi rate cuts would also pressure bank margins into Q3.
For now, the forecasts serve as a marker. AlJazira Capital's methodology is well-regarded in Riyadh, and the estimates will be used by other analysts as a cross-check. The next step is the actual Q2 numbers, starting with Al Rajhi.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.