https://arab.news/bnc6s
- The Saudi government鈥檚 announcement to cut budget spending by 7.5 percent in 2021 could have a spill-over effect in other sections of the economy
RIYADH: 抖阴短视频鈥檚 top 10 banks have shown signs of improvement in profitability, as lenders saw an increase in operating income and a reduction in provisions, according to a new report published on Sunday.
Net interest margins continued to decline reaching multi-year lows, while loans and advances grew at a faster pace despite the challenging economic circumstances, as the Kingdom鈥檚 easing of lockdown measures contributed to growth in lenders鈥� income levels.
The research, from global professional services firm Alvarez & Marsal (A&M), examined data from the 10 largest listed banks in the Kingdom and compared the third quarter of 2020 (Q3 2020) against the previous quarter (Q2 2020).
A&M鈥檚 抖阴短视频 Banking Pulse used independently sourced published market data and 16 different metrics to assess the banks鈥� key performance areas, including size, liquidity, income, operating efficiency, risk, profitability and capital. The data said that Saudi banks continued to improve their efficiency, as the cost to income ratio declined for the third consecutive quarter. Although operating expenses increased this quarter (up 4.6 percent quarter-on-quarter), the cost to income ratio fell, as operating income increased at a quicker pace (up 6.5 percent quarter-on-quarter).
The country鈥檚 10 largest listed banks analyzed in the report were: National Commercial Bank, Al Rajhi Bank, Riyad Bank, Samba Financial Group, Saudi British Bank, Banque Saudi Fransi, Arab National Bank, Alinma Bank, Saudi Investment Bank, and Bank Albilad. The report was co-authored by Dr. Saeeda Jaffar, A&M managing director and head of Middle East, and Asad Ahmed, A&M managing director and head of Middle East financial services. Ahmed said that while there was an overall improvement in profitability in Q3, the near-term outlook for Saudi banks looked 鈥渂earish.鈥�
鈥淭he Saudi government鈥檚 announcement to cut budget spending by 7.5 percent in 2021 could have a spill-over effect in other sections of the economy. We also expect interest rates to remain at current record low levels, which could limit NII (net interest income) growth.鈥�
He also said that Saudi banks鈥� strong capitalization levels would provide some cushioning against potential challenges.
鈥淔urthermore, the Saudi central bank鈥檚 extension of the loan deferral program until the end of the first quarter of next year is expected to provide some relief for the economy to recover from the effects of COVID-19.鈥�