Six Saudi banks launched a concerted effort to restore confidence on Tuesday, saying they had no direct exposure to toxic mortgages, as shares plunged on fears about the impact of the global financial crisis.

The central bank joined the verbal barrage, assuring depositors that savings were safe, but warning that profitability in the booming financial sector was threatened by crisis that stemmed from the collapse of the US housing market and an increase in bad loans.

Riyad Bank, the kingdom's third-largest by market value, said a 28 percent drop in profit in the third quarter was indirectly due to fluctuations that have affected global markets, without being more specific.

The bank's investments held for trading as per end-September lost 7.5 percent of their fair value since the end of June 2008, or about 302.1 million riyals ($80.6 million), and 10.7 percent since the end of 2007.

Riyad dismissed any impact from toxic mortgage products.

'There is no impact whatsoever of the mortgage crisis on the bank's financial situation', it said.

Al-Rajhi Bank, the Gulf's largest lender, said it had no exposure to the global mortgage market.

Samba Financial Group, the kingdom's second-largest lender by market value, and Arab National Bank said in similar statements the mortgage crisis has 'no tangible impact' on the two banks' financial situation.

Banque Saudi Fransi said it had no exposure to the global mortgage market.

Alinma Bank, the latest lender to have been listed after a $2.8 billion initial public offering in April, said its investments were not impacted by the global turmoil because they were all in Sharia-compliant products in Saudi Arabia.

Banks stocks plummeted as did Saudi Arabia's main bourse index which fell by the near 10 percent limit on Monday and shed another 7 percent on Tuesday.

Fadi Alajaji, economist at the country's central bank, the Saudi Arabian Monetary Agency (SAMA), said the global crisis will hit banks' profitability with delayed effect.

'Maybe it will not show in the current financial year but it may show in the coming years,' he said. 'But it will not impact deposits. Deposits are safe ... and the crisis will not lead to the collapse or bankruptcy of banks,' he added. - Reuters