MOST Saudi Arabian banks will hope their performances in the first quarter are an indicator of their fortunes for the whole year. With the exception of National Commercial Bank (NCB), which is yet to publish its results, all institutions recorded growth in profits and assets compared to the same period of last year.

With the integration of Saudi American Bank (Samba) and United Saudi Bank (USB) completed last December, the first-quarter showing of the new entity is an early pointer to its domination of the sector. Net earnings of SR 480.8 million ($128.2 million) suggest the bank's stated target of 18-month profits of SR 2,000 million ($533.3 million) is almost lacking in ambition.

Although Samba's interim earnings are flat on the combined income of the two banks in the same period last year, they dwarf all institutions other than Al-Rajhi Banking & Investment Corporation which turned in yet another set of impressive figures. The Islamic institution's profits of SR 422.4 million ($112.6 million) are up 17 per cent on last year, and this despite more than doubling loan loss provisioning toSR 135.7 million ($36.2 million). Conventional bankers are always quick to point out the advantage that Al-Rajhi enjoys, luxuriating in much higher levels of non-interest bearing deposits. The benefits are clear as it basks in the glow of annualised returns on assets and equity of 3.55 per cent and 27.65 per cent. Both are the best in the sector.

It is the medium-sized banks that have turned in some of the more striking interim performances. With the exception of little Bank al-Jazira, Saudi Hollandi Bank, the smallest of the joint venture operations, put in the strongest profit growth, followed by the reinvigorated Arab National Bank andAl-Bank Al-Saudi Al-Fransi.

Perhaps the most promising thought for the local bankers is that there is good reason to believe the best of the year is yet to come. Most report that since the recovery in oil prices, which started this time last year, there has been a more noticeable improvement in sentiment within the economy than actual business activity. The pendulum is swinging up, but it is far from having reached its peak.