LONDON/DUBAI: Fitch Ratings says that 2009 proved to be, as anticipated by it, a challenging year for banks in Saudi Arabia as the full impact of the global economic crisis caught up with the region, reflected in rising loan impairments and a rapid slowdown in lending.
The preliminary 2009 results released by the 10 main Saudi commercial banks rated by Fitch showed different trends in net income in 2009, with Q4 2009 being the “worst quarter of the year.”
“Nevertheless, Fitch believes that the performance of Saudi banks will improve in 2010 as economic conditions improve. After witnessing declining levels of lending in 2009, as banks became more cautious given the more challenging operating environment, Fitch expects loan growth to resume in 2010, although not at the rates seen in 2008,” says Malek Soubra, associate director in Fitch’s financial institutions team.
In addition, the 10 main commercial banks in Saudi Arabia rated by Fitch remain among the highest-rated banks across the GCC. Their long-term Issuer default ratings largely remain driven by the extremely high probability of support from the Saudi government (rated “AA-”/Stable Outlook) and are unlikely to change unless the Sovereign Rating changes.