Business | Banking
Saudi banking net profits up 10%
Foreign assets reach record highs
- By Abdul Nabi Shaheen, Correspondent
- Published: 00:00 July 22, 2011
Riyadh: Saudi banks posted an increase of 10 per cent in net profits during the first half of 2011, reaching 16 billion Saudi riyals (Dh15.66 billion) against 14.4 billion riyals during the same period last year.
All Saudi local banks, except Samba, have registered an increase in net profits during the period.
Samba's net profit fell by 8 per cent.
The Saudi Investment Bank recorded the highest growth reaching 867 per cent while the lowest growth registered by Saudi Fransi Bank, with one per cent.
Diversification
According to statements issued by the banks, the increase in net profit was attributed to a number of factors, such as increase in revenues from banking services and investments as well as from diversification of income sources, in addition to decrease in operational expense and a rise in revenues from banking service charges.
Samba's net profit dropped mainly because of the decrease in the special commissions in the second quarter of the year.
National Commercial Bank (NCB), Saudi Arabia's biggest bank by assets, posted a 16 per cent rise in its second-quarter net profit. NCB made a net profit of 1.4 billion riyals in the three months ending June, compared with 1.2 billion riyals in the same period a year earlier, it said in a statement.
Commenting on the first half performance of local banks, prominent Saudi economist Abdul Hamid Al Amri said that there have been tremendous positive changes in the banks' financial situations during the first half of the year.
This is reflected in their performance and resulted in an increase in net profit.
"The local banks were much cautious in their lending transactions during the first half of last year. They were also engaged in restructuring their loan portfolio and this was obvious from the total allocations of 25 billion riyals made by the banks to this purpose," he said adding that such a situation was not there during the first half of the current year.
According to Al Amri, tremendous positive changes occurred in the beginning of the second quarter of the year.
"The banks witnessed growth in assets to the tune of 15 per cent during the current year comparing with the previous two years and this raised the lending capability of the banks," he said.
"The lending growth of local banks recorded a negative trend during the year 2009 while it did not exceed 5.5 per cent during the last year. But the average growth in 2011 reached 8 per cent. In addition to this, the lending percentage was only 76 per cent of the volume of assets. This means that the lending did not reach the expected border levels and there is a possibility for extending further loans," he added.
Meanwhile, strong oil prices allied with higher crude output to push Saudi Arabia's foreign assets to a record high of more than 1.8 trillion riyals at the end of May.
The level is projected to reach a new peak of 1.9 trillion riyals at the end of 2011, according to an NCB report.
Libya
The report said Saudi Arabia had largely benefited from higher crude prices and a sharp increase in its oil production as a result of the current conflict in Opec-member Libya, adding that Riyadh boosted supply to one of its highest levels of 9.4 million bpd to offset Libya's supply disruption.
As crude prices hovered at $100 (Dh367) a barrel, Saudi Arabia is experiencing robust revenues and, accordingly, accelerating the Kingdom's current and fiscal accounts surpluses.
From 1,806.7 billion riyals at the end of April, Sama's foreign assets soared to a record high of 1,856.2 billion riyals at the end of May.
The increase meant that Saudi Arabia's foreign assets swelled by a whopping 140 billion riyals in the first five months of 2011, the biggest increase in such a period of time, according to financial analysts in the country.
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