The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Saudi banks face a spike in bad debt

Saudi banks often set aside most of their provisions for bad debt in the fourth quarter. Last year, there was more reason to do so, as debt problems at the local Saad and Al Gosaibi groups emerged in May and information only came out gradually.

At the end of last year, Saudi banks’ provisioning rose just under 120% quarter on quarter. This compares with a rise in the fourth quarter of around 300% in 2008.

The preliminary results of the eight largest Saudi banks (with about 90% of assets) suggest that provisioning in 2009 was up roughly 150% from 2008. Even so, the banks’ net income rose 1% last year. Banks are clearly expecting some lending to the Saad and Al Gosaibi groups to be retrieved – especially the collateralized portions.

Banks with bigger retail franchises did slightly better, perhaps because of the crisis in family businesses. Earnings at Al Rajhi, the biggest Islamic bank, rose 3.7% in 2009. This was also because of margin gains as its funding costs fell but lending income remained stable.

Samba, the biggest listed bank by assets, posted 2.4% earnings growth. Its lending to Al Gosaibi should have been collateralized, as it was a related party.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree