JEDDAH, 13 February 2005 — Saudi Arabia’s 10 commercial banks posted a combined profit of SR14.7 billion last year, registering a 59.7 percent rise compared to their performance in 2003 when their profits totaled SR9.2 billion.
The National Commercial Bank, the Kingdom’s largest in terms of capital, realized the biggest profit of SR3.53 billion in 2004, with an SR518 million increase compared to 2003.
Al-Jazeera Bank registered the highest growth rate (101 percent) in profits last year compared to other banks, followed by Samba Financial Group 74 percent, Arab National Bank 52 percent, and Al-Rajhi Banking & Investment Corp. 44 percent.
Both Saudi British Bank and Banque Saudi Fransi recorded a 30 percent increase in their profits compared to 2003. Saudi Investment Bank achieved 26.6 percent growth, Riyad Bank 26 percent, Saudi Hollandi Bank 24 percent, and NCB 17.3 percent.
The Saudi banks made record profits last year after realizing balanced growth in their budgets, Asharq Al-Awsat reported quoting bankers.
All banks were successful in expanding their client base and increasing their lending operations despite the fall in interest rates. The Kingdom’s sound economic condition created by soaring oil prices was another factor.
Saudi banks offered a variety of products to meet the needs of their clients. There was substantial increase in their investment operations, electronic projects and personal banking services.
Banks’ role in financing share purchases in the Kingdom’s recent IPOs of Ettihad Etisalat, the country’s second mobile phone operator, and National Company for Cooperative Insurance (NCCI) also helped them achieve record financial performance last year.
Al-Jazeera continued its good performance for the second consecutive year as its profits grew by 101 percent in 2004 (SR187.7 million) after a 58 percent growth rate in 2003.
Al-Rajhi’s net profit last year was estimated at SR2.9 billion while Saudi British Bank’s profit jumped to SR1.636 billion, registering 30 percent increase compared to the previous year.
Arab National Bank posted a profit of SR1.167 billion last year, registering 52 percent increase compared to 2003 (SR767 million).
Saudi Hollandi Bank’s profit in 2004 was estimated at SR742.7 million. Banque Saudi Fransi posted a profit of SR1.5 billion, with a 30 percent increase over the previous year’s SR1.1 billion. Deposits of clients in the bank rose 12 percent to SR47.7 billion while its loans and advances portfolio rose 29 percent to SR34.4 billion.
Saudi Investment Bank made a profit of SR587.1 million last year compared to SR463.9 million.
While reporting the 10 banks’ performance in the first nine months of the year, NCB’s Chief Economist Dr. Said Al-Shaikh said “the major contributor to this surge in profits was the 14 percent rise in net special commission income, representing about 60 percent of total operating income.”
He said income from fees and services shot up by 71 percent to SR4.25 billion during the first nine months of 2004 indicating improved diversification of income sources for the banks.
As a result, total operating income improved by 16 percent to SR21 billion in the first three quarters of the year, compared to SR18 billion during the same nine-month period in 2003.
Saudi banks total assets expanded by 12.9 percent to SR593 billion by the end of September 2004 compared to SR526 billion during the same period last year. This rise was mainly due to a whopping 26.5 percent increase in loans and advances, which amounted to SR259 billion by end-September this year compared to SR204 billion a year ago, Al-Shaikh said.