Saudi banks profit down 6.8% in eight months

A severe debt default problem in Saudi Arabia has combined with an economic slowdown and lower credit growth to depress the combined net income of the kingdom's banks by 6.8 per cent in the first eight months of 2009.

Official figures showed the net profits of the Gulf country's 12 commercial banks dipped to about SR21.497 billion (Dh21.28bn) in the first eight months of this year from SR23.060bn in the first eight months of 2008.

The Saudi Arabian Monetary Agency (Sama), the kingdom's Central Bank, gave no reason for the decline but analysts attributed this to slow lending because of waning domestic demand, a general business downturn, stricter lending policy by banks and allocation of large provisions for bad debt as most banks are believed to be exposed to the troubled Saudi Saad and Algosaibi family businesses.