As the Arab world’s largest economy is recovering from the coronavirus-induced downturn, four Saudi banks announced excellent profit growth.
Al Rajhi Bank, the Kingdom’s second-largest lender by assets, reported a 48 percent increase in net income to $963.8 million. The bank reported an increase in quarterly operating profit of 32 percent which reach to $1.726 billion, after income from special commissions, financing, and investments increased by 27 percent to $1.374 billion, according to a bourse filing to the Tadawul stock exchange, where its stocks are traded.
Further compared to the same time last year, impairment charges for credit losses increased by 27.5 percent to $124.68 million.
Banks in Saudi Arabia, Opec’s largest oil supplier, faced challenging operating conditions as the COVID-19 outbreak hampered economic momentum, just as their global counterparts. However, the country’s economy is improving, thanks to monetary and fiscal assistance from the government.
The International Monetary Fund (IMF) noted an increase to a solid recovery in the Kingdom’s non-oil sector and investment from its sovereign wealth fund, the Public Investment Fund (PIF). The Saudi economy is expected to increase by 2.4 percent this year and 4.8 percent in 2022, according to the World Bank.
According to Fitch Ratings, the country’s budget deficit is forecast to decrease to 3.3 percent of Gross Domestic Product (GDP) in 2021, better than the government’s objective of 4.9 percent, assuming oil prices average $63 per barrel this year.
Saudi-based Joint Stock Company, Saudi Fransi reported a 76 percent increase in net income to $209.626 million in the second quarter, as operational expenditures reduced by around 28 percent due to lower impairment charges for bad loans.
Furthermore, Riyad Bank said in a statement to the Tadawul exchange that its second-quarter net profit increased by 42.2 percent year on year to $411 billion, owing to higher operating income and lower total operating expenditures.
The credit rating agency further affirmed its “BBB+” investment-grade ratings of six Saudi lenders – Arab National Bank, Banque Saudi Fransi, Alinma Bank, Saudi Investment Bank, Bank Aljazira and Gulf International Bank-Saudi Arabia.