Saudi banks defy downturn

25 January 2002

Saudi banks had another prosperous year, despite the slowdown in economic growth and lower interest rates, the first cluster of results indicates.

Net profits at Riyad Bankrose by 12 per cent to SR 1,352 million ($360.5 million), lifting the return on assets to 2 per cent. Total assets grew by 3.2 per cent to reach SR 67,160 million ($17,893 million) in 2001, with loans rising by 4.5 per cent to reach SR 21,188 million ($5,650 million).

At Saudi British Banktotal assets fell by 3.2 per cent to SR 41,900 million ($11,173 million). However, the bank enjoyed an 11.7 per cent increase in profits despite only a modest growth in total loans. 'Our performance for 2001 was in line with our expectations,' said managing director David Hodgkinson in a statement. 'Despite lower interest rates.the increase in net fees and commission was encouraging.'

Nemeh Sabbagh, managing director of Arab National Bank, was also bullish. 'According to the targets we set out last year, we have exceeded expectations,' he told MEED on 22 January. 'This was a good year for us, particularly in terms of net operating income, and our earnings were good.' Net profits soared by 20 per cent to reach SR 486 million ($129.6 million), on the back of a 6.6 per cent increase in assets, which reached SR 40,391 million ($10,771 million). 'The sector is very healthy at the moment in Saudi Arabia,' said Sabbagh. 'The drop in interest rates will have a dampening effect on the income of banks, but apart from that, the economy is doing well, and we have fairly high expectations for the year ahead.'

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