IslamicFinance.de

Joanna Hartley reported on 24 January that the Saudi banking sector has posted poor results for the last quarter of 2008 impacted by the global economic environment according to Fitch rating, saying that 2009 will be challenging. The preliminary 2008 results released by the 10 main commercial banks in the kingdom confirmed that the last quarter of 2008 was the worst quarter of the year for all. Despite this the 10 banks remain among the highest rated by Fitch Ratings across the GCC region and generally have sound domestic franchises.

The expectation of tougher conditions for the banks and lower profitability in the coming months resulted in most banks' individual ratings being downgraded in December 2008. Their long-term issuer default ratings largely remain driven by the extremely high probability of support from the Saudi Arabian government (rated 'AA-').

All the banks reported full-year profits for 2008, while three banks reported Q4 losses: National Commercial Bank, Bank Aljazira and Saudi Investment Bank of SAR 2.5 bn, SAR 92 mn and SAR 91 mn respectively. In comparison, Al Rajhi Bank, Arab National Bank, Banque Saudi Fransi, Riyad Bank, Samba and Saudi British Bank all saw reductions in Q408 net income compared to Q407, but at much lower levels and the impact on FY08 net income was less.