Riyadh, Saudi Arabia — Quara Finance Co. reported a 60.1% decline in net profit for the first half of 2025, with earnings dropping to SAR 10.06 million from SAR 25.25 million in H1 2024, despite a 43.7% surge in revenue to SAR 144.45 million, according to its interim results posted on Tadawul.

Higher Portfolio Yield Drives Revenue, But Provisions Drag on Profit

The sharp increase in revenue was driven by portfolio expansion, increased contract originations, and higher yields. Gross profit climbed 35.9% year-on-year to SAR 128.66 million. However, operational profit fell 57.8% to SAR 12.27 million as elevated expected credit loss (ECL) provisions and rising general and administrative expenses weighed heavily on margins.

In Q2 2025, revenue reached SAR 73.91 million, marking a 43.9% year-on-year increase and a 4.8% rise over Q1. Still, net profit dropped to SAR 1.50 million, down 88.1% year-on-year and 82.4% quarter-on-quarter. Operational profit for the quarter declined 86.7% year-on-year to SAR 1.88 million.

Shareholders’ equity improved by 6.4% year-on-year to SAR 469.32 million. Earnings per share fell to SAR 0.34 from SAR 0.84 in the first half of 2024.

Quara Finance cited strong top-line momentum but acknowledged that provisioning levels and cost containment remain key challenges for the remainder of 2025.

What This Means for Investors

  • Strong revenue growth: Portfolio expansion and yield gains underline solid top-line execution.
  • Provision spike pressures earnings: Higher ECLs sharply reduced profitability despite gross profit growth.
  • Cost discipline required: Elevated expenses suggest operational tightening will be key to margin recovery.
  • Equity growth offers stability: Capital base improved despite profit contraction.

 

THE SAUDI STANDARD’S VIEW: Quara Finance Revenue Growth Validates Lending Demand Despite Margin Pressure

Quara Finance’s H1 2025 results reflect a robust underlying demand for consumer and business financing solutions in the Kingdom, evidenced by a 44% revenue surge. Yet the 60% drop in net profit serves as a cautionary signal on the cost dynamics of aggressive portfolio expansion.

  • The rise in revenue, driven by portfolio growth and improved yields, demonstrates continued appetite for credit and validates Saudi Arabia’s expanding non-bank lending ecosystem.
  • However, higher expected credit loss (ECL) provisions indicate a recalibration of risk amid broader macroeconomic adjustments or more diverse customer onboarding. The elevated provisioning suggests that portfolio growth, while strategic, must be matched by rigorous underwriting and credit surveillance.
  • The increase in general and administrative expenses reflects investment in scale and capability—likely linked to digitization and operational reach—though short-term pressure on profitability needs tighter cost management.
  • Shareholder equity improvement by 6.4% signals long-term balance sheet resilience, even as earnings per share declined from SAR 0.84 to SAR 0.34.

Quara’s case affirms that the Kingdom’s financing sector is maturing beyond headline growth into an era that will reward prudence, risk-adjusted returns, and disciplined operational execution. As Vision 2030 drives inclusive financial access and SME support, sustainable profit models—not just volume—will define leadership in Saudi Arabia’s evolving finance landscape.

 

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