Because aggregate net income increased by 15.5% in 2021 (versus 2020), there was an increase in profitability ratios, reports Saudi Arabia (KSA) Banking Pulse for FY 2021 from Alvarez & Marsal (A&M). Return on equity (RoE) increased to 11.4% in 2021 (from 10.9% in 2020), and return on assets (RoA) increased to 1.7% (from 1.6%). “In 2022, we expect corporate and mortgage lending to grow primarily due to giga government initiatives such as Red Sea project, Qiddiya and NEOM,” says Asad Ahmed, managing director and head of Middle East financial services at A&M. “Moreover, higher crude oil prices following the Russia-Ukraine conflict should also support the overall government spending in Saudi Arabia. Furthermore, we expect that the rate increase announced by the Saudi Central Bank to match the US Federal Reserve’s rate hike policy will boost the banking sector’s net interest margins and in turn its profitability.”