SABB led a surge in problem debts at Saudi banks with a 16-fold increase in non-performing loans to 3.53 billion riyals ($940.3 million) at the end of 2009.
Financial statements showed SABB's non-performing loans rose from 193.7m riyals at end-2008. Non-performing loans accounted for 4.6 per cent of its total loans in 2009, up from near-zero per cent in 2008.
SABB, 40-per-cent owned by HSBC, had provisions to cover half of them. At the end of 2009 the lender had provisions against loan losses of 1.78bn riyals, up from 629.5m riyals a year earlier, the statements added.
Its shares closed nearly 4.8 per cent lower.
"SABB is leaving the decision to make more provisions for these loans to 2010," said Hesham Abu-Jamea, head of asset management at Bakheet Investment Group.
"It did not fully provision them in 2009 because doing so would have had a massive impact on its (2009) earnings."
SABB posted an annual earnings drop of 30.4 per cent.
"The fact that the bank declares these loans to be non-performing does not mean they have to be or were written down as lost forever. Their situation can change but we will not know this until the end of 2010," Abu-Jamea said.
SABB spokesman Ibrahim Aboumouti declined to comment.
Financial statements for Riyad Bank, Arab National Bank (ANB), Al Jazira Bank and Saudi Investment Bank also showed they have made less provisions than their total non-performing loans.
Riyad's non-performing loans inched down to 1.25bn riyals in 2009 from 1.27bn riyals while impairment charges rose to 693.6m riyals in 2009 from 602.8m riyals in 2008.
Al-Jazira's bad loans surged to 1.22bn riyals in 2009 from 232.9m riyals 2008 while provisions for loan losses rose to 793.6m riyals from 381.5m riyals.
Saudi Investment Bank's non-performing loans soared to 1.79bn riyals from 294.9m riyals in 2008 while provisions rose to 1.25bn riyals from 743m riyals in 2008.
ANB, affiliated to Arab bank, said non-performing loans jumped to 1.92bn riyals from 295.9m riyals in 2008. ANB's provisions rose 41.7 per cent to 1.46bn riyals.
Because of limited transparency in the Saudi market, it was not clear where this increase in non-performing loans came from.
"The majority of these non-performing loans are the result of debt defaults by Saudi firms, many of which are family-owned, after the crisis," Bakheet's Abu-Jamea said.
Unlike many overseas peers, Saudi banks have not disclosed their exposure to troubled family-owned Saudi conglomerates.
Best covered lenders were Islamic lender Al-Rajhi Bank, Banque Saudi Fransi, Saudi Hollandi Bank and Samba Financial Group.
Hollandi, affiliated to Royal Bank of Scotland, nearly doubled provisions to 2.25bn riyals to cover 2.24bn riyals in non-performing loans, up 109.3 per cent in 2009.
Fransi, affiliated to Credit Agricole, raised provisions by 51 per cent to 1.28bn riyals in 2009 to cover bad loans which rose 32.2 per cent to 1.01bn riyals.
Samba's non-performing loans rose 58 per cent to 2.91bn riyals in 2009 while its provisions climbed 9.9 per cent to 3.38bn riyals, according to financial statements.
Rajhi said financing whose value declined – the term it uses to refer to bad loans – rose to 3.87bn riyals in 2009 from 2.77bn riyals in 2008. Provisions rose to 4.19bn riyals in 2009 versus 3.95bn riyals in 2008.
Consider also reading:
Rising provisions weigh on Saudi banks outlook
Saudi banks book more provisions on bad loans
Saudi banks' credit hits lowest level in 2009
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