Saudi banks most profitable in Middle East

JEDDAH – Out of the top 50 banks in the Middle East ranked by assets for the period H1 2011, Saudi banks lead the pack “having a good track record of maintaining strong asset quality and adapting adequate lending practices and underwriting standards,” Sheetal Kothari, research analyst, business and financial services practice, Frost & Sullivan, said.

The Gulf Business Top 50 Banks in the Middle East report said “Saudi Arabia’s traditionally conservative fiscal polices coupled with the billion-dollar government budget, has buoyed the banking sector with four out of the five top ten banks being based in the Kingdom.”

Saudi Arabia is one of the world’s fastest growing banking markets.
According to a new research report, commercial banks operating in the Kingdom are likely to be more efficient in near future on back of technological developments, and favorable government policies. Despite the eurozone crisis, the Saudi Arabian banking industry registered an impressive growth, and it is estimated that the lending will grow at a compound annual rate of around 10 percent during 2012-2015 in the Kingdom due to liquidity and capitalization. The study “Saudi Arabia Banking Sector Outlook 2015″, found that despite adverse economic conditions, the Saudi Arabian banks continued to expand their lending activities.

We observed that in Saudi Arabia, the banking sector is largely dominated by corporate banking, but the retail segment is yet to take off. In the past few years, consumer loans, which earlier accounted for only less than a quarter of the total banking market, have shown a significant growth.

Forecasts for key banking segments, like loans, and deposits, have also been presented which will help clients know the direction in which the Saudi Arabian banking sector is likely to proceed in the coming years.

“Most of the top 10 profit growers came in from a lower base than their weightier counterparts, however the mammoth profit jumps are evidence of a grassroots regional recovery as banks in Saudi Arabia, Oman and Qatar feel the buoying effects of government support that Western banks are sorely missing,” the report noted.

Top 10 banks in the GCC by H1 profit growth:

1. Bank Albilad: 385 percent

Saudi Arabia’s second-smallest bank by market value tops the list with 385 per cent growth, reported half-year profits of $177.3 million, up from $36.5 million last year.

2. Bank Dhofar: 324 percent

Oman’s third-largest bank by market capitalization, Bank Dhofar reported a 324 per cent rise post net profit of $50.6 million in the six months ending June 30.

3. Bank Al Jazira: 115 percent

Bank Al Jazira, Saudi Arabia’s smallest lender by market value, posted a 115 per cent rise with a $72.5 million net profit to June 30 2012.

4. Alinma Bank: 91 percent

Saudi’s Alinma Bank posted a 91 per cent rise, ending the first half of the year with $87.8 million in net profit.

5. Saudi Hollandi: 24.1 percent

Saudi Hollandi, the Kingdom’s oldest bank, posted a 24.1 per cent profit increase. The bank ended the first six months of the year with $165.9 million in net profit, up from $133.6 million for the same period in 2011.

6. Burgan Bank: 23 percent

Kuwait-based, Burgan Bank reported a rise of 23 per cent for the first half of the year with net profit of $110.3 million.

7. Sharjah Islamic Bank: 21 percent

Sharjah Islamic Bank, from the United Arab Emirates, posted a 21 per cent rise in net profit at $40.6 million for the first half of the year, up from $33.5 million in 2011.

8. Bank Muscat: 19.6 percent

Oman-based Bank Muscat posted a net profit of $177.6 million for the first six months of the year, a 19.6 per cent rise from last year’s $148.5 million.

9. Boubyan Bank: 18 percent

Boubyan Bank from Kuwait, reported $18.4 million in net profit for the first six months; an 18 per cent rise from the bank’s 2011 figure.

10. Qatar National Bank: 17.1 percent

QNB a net profit of $1.1 billion for the first six months, a 17.1 percent increase from last year.

The Saudi Gazette 2012, Aug 28 2012