	saudi banks face further lean period saudi arabia s commercial banks are reporting a further decline in profits for as increasing provisions have to be set aside to cover the burden of non performing loans bankers in the saudi capital said the need to build reserves for bad and doubtful debts may start to decline a little this year but the kingdom s still sluggish economy and legal problems hampering traditional lending operations mean ings will remain vulnerable one senior bank credit officer said the work is largely done in terms of identifying bad loans and making provisions but banks are still going to face difficulties ing money the sudden decline of saudi arabia s corporate sector in culminating in a number of debt reschedulings has taken a heavy toll of bank profits with first results now appearing for showing a fourth successive year of broad decline the cumulative net ings of the kingdom s banks had sunk to mln riyals from billion in before world oil prices tumbled of the kingdom s nine joint venture banks which operate on the gregorian calendar year four have already reported and revealed a further profits decline or net loss for at the expense of increased provisions the newest and smallest of the joint ventures united saudi commercial bank uscb reported a net loss of mln riyals marginally less than s shortfall of mln profits before provisions were sharply higher in part reflecting an pct staff cut last year but the bank nearly trebled the amount set aside against bad and doubtful loans to mln riyals from mln in other results released so far show saudi american bank samba reporting a pct fall in net profit to mln riyals while al bank al saudi al fransi known as saudi french slid pct to mln riyals both saudi american owned pct by citicorp s cci n citibank na and saudi french pct owned by banque indosuez increased provisions sharply arab national bank s net profit fell pct to mln riyals and provisions were more than doubled to mln riyals bankers said there are first signs that the number of non performing loans has stopped growing as the decline in the saudi economy bottoms out few are willing to predict a sharp upturn in economic activity but one banker said the top pct of the saudi banks are now at or close to international levels on provisions from to the kingdom s largest bank national commercial bank ncb stashed away billion riyals in provisions or pct of its total loans and advances to the private sector bankers calculated between and riyad bank ncb s rival as the second biggest of the two all saudi shareholding banks had covered pct of its loans and advances both banks operate on an islamic year that does not coincide with the other nine although the saudi arabian monetary agency sama has been tightening supervision there is still no standardised rule for declaring loans as non performing bankers say this makes comparison of profit figures difficult because some banks still book non accruing interest as revenue while others follow more conservative practices in force in major world financial centres bankers generally said ncb riyad bank and the joint ventures samba saudi french and arab national bank rank as the strongest ers other banks such as saudi british bank pct owned by the british bank of the middle east are disadvantaged by a relatively low deposit base saudi british slashed profit pct to just mln riyals and accounts due soon are expected to show another low figure but the bank has traditionally been one of the most conservative in making provisions bankers said sama has proved it is not prepared to see a saudi bank go under and not only supported saudi cairo bank after its troubled accounts came to light but also made available cheap deposits to saudi investment bank and uscb the banks can on lend these to generate profit but generally banks are awash with liquidity since they are unwilling to risk incurring fresh non performing loans and while banks in more liberal financial markets can attempt to diversify away from traditional lending conservatism in saudi banking has made it difficult to generate fee income from new investment banking products one banker said operating ings in the kingdom are not good reflecting the caution in new lending the amount of advances is showing a declining trend while the days when banks had ample funds in interest free current accounts to invest are disappearing as saudi customers seek a better return on their money in the ratio of interest bearing accounts to current accounts was to pct today only about pct of customer funds are held on current account reuter 
