Saudi banks to net record income in 2013
Saudi Arabia’s banks netted nearly SR22.2 billion in the first seven months of 2013 and the profits are projected to hit an all-time high through the year due to high lending and lower provisions, according to a local investment firm.
The earnings during Jan-July were nearly 4.6 per cent higher than the net profits of the Gulf kingdom’s 12 banks in the same period of 2012, the Riyadh-based Jadwa Investment said in a report sent to Emirates 24|7.
“Bank profitability continues to benefit from preferred operation environment in the Kingdom as banks face lower funding cost, rising demand for credit and lower accumulation of provisioning,” Jadwa said.
“Monthly profits recorded new highs for the third consecutive month in July compared with the same period in the last five years. This is in line with our view that profits this year are on track to surpass the all-time high of SR34.7 billion recorded in 2006.”
Saudi banks, with the second largest asset base in the Middle East after UAE banks, profited around SR33.5 (Dh33.2bn) in 2012, their second highest profits since the 2006 record income of about SR34.7bn.
The income last year was nearly 8.4 per cent above the 2011 net earnings of around SR30.9 billion but the profit growth in 2012 was much slower than in 2011, when it stood at around 18.3 per cent.
The increase in profits followed negative growth ion 2008-2010 because of the 2008 global fiscal distress and the ensuing debt default crisis in the Kingdom, the largest Arab economy and the world’s top oil supplier.
Slackening domestic credit allied with a rise in bad loan provisions to trim Saudi banks’ net profits to around SR29.2 billion in 2008 from SR30.2bn in 2007. Profits continued their fall to reach SR26.8 billion in 2009 and SR26.1bn in 2010 before rebounding in the following two years.
Saudi banks have the second largest asset base in the Arab region after UAE banks, with their combined assets standing at SR1,807bn at the end of June 2013 against about Dh1,878bn for UAE banks.
By Staff, September 08, 2013