Saudi banks register 14pc rise in aggregate net profit

RIYADH: Saudi Arabia-listed banks reported a 14 per cent rise in aggregate net profit to 4.02 billion riyals ($1.07bn) in March 2021 as against 3.53bn riyals ($941 million) a year earlier, according to data from the Saudi Central Bank (SAMA).

The data covers 11 listed banks and some foreign banks operating in the kingdom.

Banks’ aggregate assets grew by over 11pc year on year (YoY) to 3.035 trillion riyals ($809.2bn) in March, combined deposits increased by 9pc YoY to 1.980trn riyals in the same month, whereas loans to the private sector saw an increase of 15pc YoY to around 1.871trn riyals by the end of March.

Talat Zaki Hafiz, financial analyst and banking expert, said: “The obvious reason for the aggregate reported net profit by Saudi banks to show a rise of 14pc is the positive return back of the banking sector to the normal operations after a long period of lockdown (partially and completely) of more than 70 days, between March and May last year due to the Covid-19 pandemic as part of precautionary measures taken by the Saudi government to prevent the spread of the virus.”

During the lockdown, Saudi banks were able to serve its clients normally, despite the fact that in certain days of the lockdown the sector was operating with only 25pc of its branches network capacity which exceeds in total 2,000 branches kingdom-wide, he added.

Saudi banks utilised technology and electronic payments to serve customers effectively as is evident from report by SAMA, which also indicated that the rate of e-payments for the retail sector – Individual Retail Payments by the end of July 2019, amounted more than 36pc of all payments available, exceeding the targeted percentage of the financial sector development (FSDP) programme, one of the key programmes of Saudi Vision 2030, he underlined.

FSDP stipulates that the share of non-cash transactions should be increased by 28pc by 2020, he added.

“This achievement is based on SAMA’s strategy for payment systems and the FSDP, which aims to enhance e-payment and reduce cash handling to reach 70pc of total payments in the kingdom by 2030,” said Hafiz.

SAMA also pointed out that the record growth rates witnessed in the e-payments through the national payment system “Mada” is a result of Mada strategic plan, he added.

Dr Osama Ghanem Al Obaidy, adviser and professor of economic law at the Institute of Public Administration, Riyadh said: “The increase in net profits of Saudi banks and foreign banks operating in the kingdom is due in part to corporate credit growth which picked up substantially in 2021 after the Public Investment Fund (PIF) programmes helped generate additional business for contractors and credit to small and medium enterprises (SME).”

“Saudi banks and foreign banks operating in the kingdom outperformed their regional counterparts. This reflects the relatively low impact of the pandemic on the performance of Saudi banks loan books and higher growth of mortgage lending.”

The outlook for Saudi banks and foreign banks operating in the kingdom is expected to remain positive, he added.

This rise in net profits is also due to lower impairments and higher fees and commissions which is indicative of the Saudi economy’s resilience and recovery from the pandemic impact, he added.

 

Source: https://www.gdnonline.com/Details/943763

 

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