Al Rajhi Bank: Facing Liquidity and Regional HeadwindsAl Rajhi BankTADAWUL_DLY:1120PEKBITDespite reporting solid Q1 2026 results, with a 14% growth in net profit, several systemic and macroeconomic risk factors could exert pressure on the stock in the medium term. Prolonged instability linked to the Iranian conflict represents a material risk for the entire Saudi banking sector. If the conflict were to escalate, Fitch warns that asset quality, profitability, and bank liquidity could contract, forcing an increase in provisions for credit losses (impairment charges). The sector is facing a contraction in liquidity conditions, with loan-to-deposit ratios hitting record levels across the board. In a stress scenario, Al Rajhi Bank's liquidity position could be tested: estimates indicate that the liquidity coverage on deposits for Al Rajhi, Riyad Bank, and Bank Albilad could fall to critical levels (10% or less) in the event of significant outflows. Growing competition for deposit gathering is driving up the cost of funding. If interest rates remain "higher for longer," banks with a high reliance on certificates of deposit or subject to greater domestic competition would see their net interest margins (NIM) compressed. The massive adoption of fintech, instant payments, and digital banking in Saudi Arabia is "compressing" risk timelines. The need to constantly update Anti-Money Laundering (AML) frameworks and cybersecurity in a rapidly evolving environment entails increasing operational investments which, over time, could weigh on the cost-to-income ratio. Despite the positive Q1 2026 results, shares have shown immediate signs of weakness on the stock exchange, reflecting growing "market caution" rather than simple fundamental weakness. When a stock reacts negatively to positive news, it often signals that the market has already priced in optimistic growth scenarios, making the asset vulnerable to potential corrections should future expectations not be met.