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Sat 16 Jan 2010 05:12 PM

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Profits at biggest Saudi bank dip at end of 2009

State-owned bank posts lowest quarterly profit in 2009; loans growth slows.

Profits at biggest Saudi bank dip at end of 2009
LOW PROFITS: Most Saudi banks posted poorer Q4, 2009 earnings. (Getty Images)

Earnings at National Commercial Bank (NCB), the largest Saudi bank by assets, almost doubled last year despite a slowdown in lending, but its fourth quarter profit looked to have fallen to the lowest in a year.

State-owned NCB, which is slated for privatisation, made a net profit of 4.04 billion riyals ($1.08 billion) in 2009, up from 2.03 billion riyals in 2008, it said in a statement.

"This (rise in 2009 net profit) confirms the bank's ability to efficiently manage its assets and diversify its sources of income in spite of global economic challenges," it said.

The bank did not disclose a net profit for the fourth-quarter, which based on the annual and previous figures Reuters calculated to be about 770 million riyals, compared to a net loss of 2.55 billion riyals a year earlier.

That would be NCB's lowest quarterly net profit in 2009.

Most Saudi banks posted poorer fourth-quarter and annual earnings for 2009 due mainly to the global economic slowdown and provisions for loan losses after multi-billion dollar debt defaults last year by some family-owned firms which made banks more meticulous on lending.

Banks more than tripled provisions against loan losses over the first nine months of 2009 to 6.04 billion riyals.

NCB itself raised provisions for loan losses nine-fold over the same period to 1.87 billion riyals.

The global economic slowdown coupled with a drop in oil revenues slowed the Saudi economy to the verge of contraction in 2009, likely eking out a growth of 0.15 percent compared to 4.3 percent in 2008.

NCB said its loans rose 4 percent in 2009, compared to 22.8 percent in 2008, while deposits rose 17.9 percent in 2009, down from a 20.3 percent rise in 2008.

NCB began consolidating earnings last year of Islamic lender Turkiye Finans, after the Saudi bank paid $1.08 billion in 2007 for 60 percent of the Turkish bank's capital.

The Jeddah-based bank plans to sell shares to the public for the first time as part of a government plan to divest state assets. It has not yet set a date for an initial public offering. (Reuters)

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