Saudi banks sound bright note in Q4

Three Saudi lenders including Banque Saudi Fransi posted fourth-quarter earnings above forecasts, kicking off the sector's earnings season on a bright note after uncertainty over provisions.

Provisions for bad loans to cover a fallout from family firms hit the profits of lenders in the top oil exporter and biggest Arab economy in previous quarters.

But bank results posted on the Saudi bourse website made no reference to provisions for bad loans.

Analysts have said lenders have set aside enough in the past few quarters to cover the bulk of problem borrowings.

Saudi companies and the kingdom's bourse have been criticised for opaque reporting practices.

"We think that all banks will report results above forecasts. There seem to be no provisions anymore," said Hisham Tuffaha, head of research at Saudi investment bank Bakheet.

"We can expect continuous growth of banks in 2011," he said.

Sentiment for the sector in the biggest Arab economy had been dented after central bank governor Muhammed al Jasser said in October provisions for bad loans should exceed 100 percent of their value.

Banque Saudi Fransi boosted net income by 119 percent to $189m in the fourth quarter, the affiliate of France's Calyon said on the bourse website.

Analysts surveyed by Reuters had expected net profits of $160m on an average.

The bank cited the performance of its core business and lower costs.

Special fee or lending income rose by 2.7 percent to $210.3m in the quarter. The loan book was up 3.45 percent to $21.5bn at the end of the year.

Tuffaha said consumer lending could get a lift this year as the economy would benefit from a record budget unveiled in December.

Riyad Bank's fourth-quarter net profit fell by 16.2 percent to $203.7m but was still above the average net profit of $191.8m forecast in a Reuters survey.

It cited a 1.8 percent fall to $277.8m in lending income in the quarter. The loan book was down 0.5 percent at the end of the year.

Smaller lender Bank Saudi Hollandi posted a net profit of $59.8m in the quarter after a loss of $117.1m in the same period a year ago.

The loan book fell by 0.5 percent to $28.2m at the end of December, said the bank part owned by a consortium led by Royal Bank of Scotland.