Saudi banks improve performance

19 October 2001

The kingdom's banks achieved aggregate profit growth of 13.7 per cent year-on-year in the first nine months of 2001 and 4.1 per cent growth in total assets. The figures show an acceleration in the rate of profit growth, from the 12 per cent growth in profits recorded in the first half of the year, but a deceleration from the 7 per cent growth in assets year-on-year recorded at the end of the second quarter (MEED 3:8:01).

National Commercial Bankscored the highest profit growth; its net profit increased 31.7 per cent to SR 1,730 million ($461 million). Saudi Hollandi Bankand Saudi British Bankincreased their profits by 24 per cent and 14 per cent respectively. Saudi Hollandi reported a net profit of SR 372 million ($99.2 million) and Saudi British a net profit of SR 639 million ($170 million). Only Al-Rajhi Banking & Investment Corporationfailed to increase its profits; it posted a 10.9 per cent fall on its bottom line to SR 1,268 million ($338 million).

A comparison with the half-year results gives a mixed picture of lending activity in the third quarter. Al-Bank al-Saudi al-Fransiand Saudi Hollandi showed the strongest year-on-year growth in loans and advances, of 17 per cent and 15.1 per cent respectively. Only Riyad Bank, the third largest lender in the kingdom, saw an increase of less than 5 per cent in its loan portfolio, with growth of just 2.1 per cent.

There has been a wide variation in the pattern of provisions this year. Saudi American Bank (Samba), for example, has reduced its provisions heavily. Banks that have increased provisions substantially include Saudi French and Arab National Bank.

In terms of performance ratios, the strongest improvement was shown by Samba, which saw annualised return on assets rise to 2.9 per cent from 2.6 per cent, and annualised return on equity rise to 24.6 per cent from 20.5 per cent. Reflecting its poor third-quarter profits, Al-Rajhi saw its return on assets drop to 3.2 per cent from 3.9 per cent; its return on equity fell to 21.8 per cent from 26 per cent.

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