Saudi Hollandi denies credit losses subprime related

CREDIT LOSSES: Saudi Hollandi said losses have nothing to do with the subprime crisis.

Saudi Hollandi Bank missed fourth quarter forecasts with a net loss that it said was due to higher provisioning for bad debt. The bank had not taken a hit from subprime mortgage debt, a spokesman said.

Saudi Hollandi, in which ABN Amro owns a 40% stake, made a net loss of 106.3 million riyals ($28.3 million) in the fourth quarter, the bank said in a statement on the stock exchange website.

Hollandi had suffered "credit losses" and a decline in banking fees, it said, without giving details.

"[The credit losses] have nothing to do with the subprime crisis. We had to make provisions for bad loans," spokesman Farid Zouq said. He also declined to give details.

Saudi companies usually publish detailed financial statements more than a week after they announce the headline figures.

"Theoretically it's normal for banks to make provisions for bad debts but it's virtually unheard of in Saudi Arabia because banks here follow very stringent lending policies," said Ibrahim Al-Alwan, deputy chief executive for KSB Capital.

Analysts forecast Hollandi would make a fourth quarter profit of between 185 million riyals and 244 million riyals, according to a survey by newswire Reuters last month.

The bank made a net profit of 289.9 million riyals in the fourth quarter of 2006, Saudi Hollandi said in a statement.

Four of Saudi Arabia's five largest banks by market value have missed analysts' fourth quarter forecasts, citing a decline in stock market related income. The Saudi market was best performing Arab bourse in the fourth quarter and worst performer in the region in 2006.

Banks in the Middle East will announce losses from exposure to the US subprime mortgage crisis when they report fourth-quarter earnings, London-based magazine the Middle East Economic Digest (Meed) reported on Saturday, citing bankers in Dubai, Qatar and Bahrain.

Global banks including Citigroup and Merrill Lynch & Company have written down at least $75 billion in credit market losses. Of the 20 largest Gulf banks by market value, only Abu Dhabi Commercial Bank (ADCB) has reported any subprime losses, writing down $19 million in the third quarter. (Reuters)

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