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Fri 5 Mar 2010 02:03 PM

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Nomura sees Saudi banks earnings recovery in 2011

Brokerage expects banks to see a rise in net interest margins next year.

Nomura sees Saudi banks earnings recovery in 2011
BROKERAGE VIEW: Nomura said asset quality at the banks was likely to continue deteriorating. (Getty Images)

Nomura forecast 2011 to be a strong recovery year for Saudi banks, backed by a rise in interest rates and higher lending activity.

The brokerage said it expected the banks to see an increase in their net interest margins next year, along with loan growth, supported by their high liquidity positions and an improvement in demand.

For 2010, however, the brokerage said it does not see Saudi banks posting a significant boost to their profitability, with banks continuing to book high provisions for bad loans.

"Top-line revenue growth is likely to remain weak amid sluggish volume growth and pressured margins," Nomura said in a note to clients.

The brokerage said asset quality at the banks was likely to continue deteriorating - mainly originating from the corporate segment - and expected weak growth due to a lack of demand from the private sector. (Reuters)

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