Saudi Arabian banks are expected to record a net income increase of 17.8 percent in 2011 with provisions see falling by a third, Global Investment House said in a new report.
The prediction is significantly higher than the 2010 growth recorded by Saudi banks (1.7 percent) which was mainly driven by the decline in provisions by 11.5 percent, Global said.
The report added that it expected the level of non-performing loans held by Saudi banks to remain stable at around 2.7 percent, falling to 2.2 percent by 2014.
"Saudi banks’ loan portfolio seems to be back on the rising path. The loan book of the listed banks after recording an increase of 3.9 percent year-on-year (YOY) in 2010, are expected to record even stronger growth of 12.1 percent YoY in 2011," Global said.
"Our optimism regarding loan growth in near future is based on the revival of business confidence, the banks’ willingness (with caution) to loosen up credit extension, enhanced public spending with various infrastructure projects in the pipeline, and higher private sector participation to fulfill innate domestic demand."
The report added that Global expected the loan portfolio to record annual growth of 13.9 percent to 2014.
Earlier this month, it was reported that Saudi Arabian bank lending was climbing the most among the six Gulf Cooperation Council nations this year as growth in the biggest Arab economy accelerated.
Bank credit to the private sector expanded 4.6 percent in the five months through May, according to data from the Saudi Arabian Monetary Agency.
The rate ranged from a 4 percent drop in Bahrain to a 2.7 percent increase in the other five GCC countries.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.