Rajhi Bank nearly doubles provisions
Riyadh, October 13, 2010
Al-Rajhi Bank has nearly doubled provisions during the third quarter to cover 122 percent of its total non-performing loans, the Saudi lender said on Wednesday.
The bank posted an 8.6 percent fall in third-quarter earnings.
Al-Rajhi, the biggest Saudi Islamic lender, booked loan provisions worth 1.4 billion riyals ($373.3 million) in the nine months to end-September, it said in an email sent to Reuters, after 781 million riyals in the six months to end-June, 2010.
This means that third-quarter loan provisions stood at 619 million riyals, up from the 594 million riyals a year ago, according to Reuters calculations.
Provisions for non-performing loans and a low-interest rate environment have been hitting the profitability of Saudi banks since early 2009 and so far those that have reported on the third quarter have shown falls in earnings and attributed it to bad loan provisions.
The majority of Saudi banks have had to book higher provisions for the previous four quarters to cover possible loan losses linked to debt defaults by some troubled Saudi family-owned firms.
On Tuesday Saudi central bank Governor Muhammad Al-Jasser said banks should be conservative and make provisions covering more than 100 percent of their non-performing loans. - Reuters