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28 March 2024

Saudi banks earn SR12.5 bn in first 4 months

Published
By Staff

Saudi Arabia’s banks netted nearly SR12.52 billion in the first four months of 2012, aided by high oil prices, strong economic performance and a surge in lending, according to official data.

The Gulf kingdom’s 12 commercial banks earned around SR3.46bn in January, SR3.1bn in February and about SR2.6bn in March, a quarterly net earnings of nearly SR9.3bn, showed the figures by the Saudi Arabian Monetary Agency (Sama), the country’s central bank.

Net income stood at around 3.1bn in April and analysts believe the combined profits could exceed the five-year high earnings achieved in 2011.The figures showed the high earnings were a result of a surge in domestic credit as banks are slowing down their bad debt provision build up and taking advantage of an upswing in the economy and in public sector projects.

The surge in credit followed a sharp slowdown in previous years in the wake of the 2008 global fiscal distress and debt default by two Saudi family businesses.Slackening domestic credit allied with a surge in provisions to trim Saudi banks’ net profits to around SR26.8 billion in 2009 from SR29.9bn in 2008. Profits again slipped to SR26.1bn in 2010 before bouncing up to SR30.9bn in 2011, their highest level since 2006 and the second highest in banks’ history.

Sama's figures showed banks’ claims on the private sector swelled by 13.3 per cent year/on/year in April against 10.5 per cent in the previous period. Lending grew by about 5.5 per cent in 2010 and remained stagnant in 2009.

The banks’ profits in 2011 were 18 per cent above the 2010 income and marked a return to profit growth by the banking sector in the largest Arab economy.Saudi Arabia’s banks netted their highest profits of SR34.6bn in 2006 before the income slumped to SR30.2bn in 2007.

During the two years that followed the domestic default crisis, Saudi banks chopped off a large part of their income to build up provisions against non-performing loans, with an estimated allocation of nearly SR20.4bn.

Saudi banks have the second largest asset base in the Arab region after UAE banks, with their combined assets standing at SR1.60 trillion (Dh1.58 trillion) at the end of February against about Dh1.66trn for UAE banks.