Riyadh : Three Saudi lenders have booked provisions of loan losses during the second quarter, as the Saudi banking sector pushes on with a clean-up loan portfolios hit by defaults of local firms.
Samba Financial Group, the kingdom's second-biggest lender by market value, booked 57.4 million Saudi riyals (Dh56.19 million) for loan losses during the second quarter, down from 97.9 million riyals a year earlier, bourse data showed yesterday.
Samba's net profit fell 1.9 per cent in second-quarter net profit due mainly to a decline in income from lending.
The much-smaller Saudi Investment Bank meanwhile more than quadrupled these provisions compared to a year earlier to 300 million riyals. The lender reported an 88 per cent fall in its net profit for the same period.
Samba was one of only a few Saudi banks that at the end of 2009 booked provisions higher than their non-performing loans.
Unlisted and state-owned National Commercial Bank (NCB), the kingdom's biggest lender by assets, raised its provisions for loan loss by 44 per cent during the second quarter to 613 million riyals, according to financial statements published in Saudi newspapers.
NCB's second-quarter profit rose 3.4 per cent.
Saudi lenders had a difficult year in 2009 when profitability was eroded by provisions for non-performing loans. These provisions doubled compared to previous year to almost 11 billion riyals as a number of Saudi and regional firms ran into financial problems.
Provisions for loan losses rose to 1.5 per cent of total bank credit in 2009, up from 0.67 per cent in 2008. Non-performing loans surged to more than 3 per cent of total bank credit in 2009, almost double their level in 2008.
Several Saudi banks saw lower profits during the first half of the year as credit growth struggled to recover after a lending spree during 2004-2008 period that was buoyed by a surge in the kingdom's oil revenues. The growth of Saudi bank credit, especially to the private sector, was flat throughout much of 2009 due to the global slump and after defaults by local family firms.
Aviation
Airline adds 20 jets
State-owned Saudi Arabian Airlines said it has added 20 new Airbus aircraft so far out of a total of 39 scheduled to join its fleet this year, pan-Arab Al Hayat daily reported yesterday. The move aims to enable the airline to meet a growing demand for travel, the paper reports citing Abdul Aziz Al Hazmi, executive vice president at the national flag carrier, who added that the 20 new aircraft comprise 17 of the Airbus 320 model and three of the Airbus 330 model. The airline is currently encountering huge challenges in operating the domestic sector that other airlines have exited, Al Hazmi said, according to the daily.
Electricity
Deal to boost power
Saudi Electricity Co. has signed a 223 million Saudi riyal ($59.46 million) deal with a local contractor to boost the capacity of its network in Riyadh to cope with extra loads there, Jeddah-based Okaz daily reported yesterday. The deal involves connecting the Hittin No 9005 new transformer station to an electricity grid with a voltage of 132 kilovolts, the paper reported citing Ali Al Barrak, chief executive of the utility, transmission and distribution in the kingdom. The two-year contract, signed with Mohammad Al Ojaimi Contracting Establishment, also entails making some modifications to a network linking some stations in northern Riyadh, he said.
— Zawya Dow Jones
