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Saudi’s SABB, Riyad hike Q2 provisions for loans
Riyad Bank's Q2 loan provisions more than double.
July 28, 2010 10:22 by Reuters
Saudi-based banks SABB and Riyad sharply raised provisions for loan losses during the second quarter, pressing on with a clean-up of their loan portfolios after defaults by some local firms.
Riyad raised provisions for loan losses by 105.4 percent to 196.2 million riyals ($52.3 million) during the second quarter while SABB booked 504 million riyals for the same purpose, more than 60 percent above the year-earlier period, stock exchange data showed on Tuesday.
HSBC holds a 40 percent stake in SABB.
During the first quarter, Riyad booked loan provisions worth 194 million riyals while SABB’s stood at 176.5 million riyals.
Riyad saw its net profit fall 16.5 percent in the second-quarter while SABB’s fell 34 percent.
Saudi lenders had a difficult year in 2009 with profitability eroded by a doubling of provisions for non-performing loans to almost 11 billion riyals as a rising number of Saudi and regional firms ran into financial problems.
Several Saudi banks continued to see lower profits during the first half as credit growth struggled to recover after a lending spree over the 2004-2008 period that was buoyed by a surge in the kingdom’s oil receipts.
The growth of Saudi bank credit, especially to the private sector, was flat throughout much of 2009 due to the global slump and after defaults by local family firms.
Shares in SABB are up 2.5 percent this year while Riyad is up 7.8 percent. The banking stocks index has gained 7.1 percent this year, against a 2.5 percent rise in the all-share index.
(Reporting by Souhail Karam; editing by Jason Neely)