Most banks in the biggest Arab economy have posted upbeat fourth-quarter results, with several above analysts' average forecasts, after booking provisions in the third quarter. However, credit growth in the Kingdom remains in single digits.

"It's clear that when bad loans go down, then provisions go down as well so banks undertook less ... in the fourth quarter," Muhammad Al-Jasser told Saudi-owned Al Arabiya television.

"They have taken enough... to tackle any situation now," he said, adding that he saw no need for "big" provisions.

Saudi banks are set to expand this year and credit growth would accelerate beyond 5 percent achieved last year, Al-Jasser said.

"Lending will grow and accelerate," he said, without giving figures.

Al-Jasser, who said in October provisions for bad loans in the OPEC member should exceed 100 percent of their value, declined to say whether provisions would fall in 2011.

"The provisions put Saudi banks in a very strong position," he said.

The Saudi banking sector had been hit by debt restructuring in family-owned businesses in the past.

As a result, lending growth stalled in December 2009 but it has been picking up slowly over the past few months with the pace well below over 20 percent rates seen at the beginning of 2009.

Most Saudi banks exceeded average analyst forecast with net profit in the fourth quarter, among them HSBC affiliate SABB and Banque Saudi Fransi, part-owned by France's Calyon.

Meanwhile, Al-Rajhi Bank, the Kingdom's biggest Islamic lender, said on Wednesday it posted a 13.5 percent rise in fourth quarter net profit, broadly in line with analysts' forecasts.

Al-Rajhi said net profit for the three months ended Dec. 31 rose to SR1.66 billion from SR1.47 billion in the fourth quarter of 2009, following a string of upbeat earnings releases from banks in the world's top oil exporting nation.

Analysts surveyed by Reuters had expected SR1.69 billion on average.

Net income from lending in the fourth quarter went up 3 percent to SR2.14 billion, Al-Rajhi said in a bourse statement.

The bank said in a separate statement it plans to pay SR1.5 per share in dividends for the second half of 2010.