Saudi Arabian banks sound bright note in Q4

Three Saudi lenders including Banque Saudi Fransi posted fourth-quarter earnings above forecasts, kicking off the sector's earnings season on a bright note after uncertainty over provisions.

Provisions for bad loans to cover a fallout from family firms hit the profits of lenders in the top oil exporter and biggest Arab economy in previous quarters.

But bank results posted on the Saudi bourse website made no reference to provisions for bad loans.

Analysts have said lenders have set aside enough in the past few quarters to cover the bulk of problem borrowings.

Saudi companies and the kingdom's bourse have been criticised for opaque reporting practices.

"We think that all banks will report results above forecasts. There seem to be no provisions anymore," said Hisham Tuffaha, head of research at Saudi investment bank Bakheet.

"We can expect continuous growth of banks in 2011," he said.

Sentiment for the sector in the biggest Arab economy had been dented after central bank governor Muhammed al-Jasser said in October provisions for bad loans should exceed 100 percent of their value.

Banque Saudi Fransi boosted net income by 119 per cent to 709 million riyals ($189m) in the fourth quarter, the affiliate of France's Calyon said on the bourse website.

Analysts surveyed by Reuters had expected net profit of 600.1m riyals on average.

The bank cited the performance of its core business and lower costs.

Special fee or lending income rose by 2.7 per cent to 789m riyals in the quarter. The loan book was up 3.45 per cent to 81 billlion riyals at the end of the year.

Tuffaha said consumer lending could get a lift this year as the economy would benefit from a record budget unveiled in December.

Riyad Bank's fourth-quarter net profit fell by 16.2 per cent to 764m riyals but was still above the average net profit of 719.60m riyals forecast in a Reuters survey.

It cited a 1.8 per cent fall to 1.042bn riyals in lending income in the quarter. The loan book was down 0.5 per cent at the end of the year.

Smaller lender Bank Saudi Hollandi posted a net profit of 224.6m riyals in the quarter after a loss of 439.4m riyals in the same period a year ago and compared with the average forecast of 94.60m riyals in a Reuters survey.

The loan book fell by 0.5 per cent to 106.03m riyals at the end of December, said the bank part owned by a consortium led by Royal Bank of Scotland.