RIYADH: Saudi-based banks SABB and Riyad sharply raised provisions for loan losses during the second quarter, pressing on with a clean-up of their loan portfolios after defaults by some local firms.
Riyad raised provisions for loan losses by 105.4 per cent to 196.2 million riyals ($52.3m) during the second quarter while SABB booked 504m riyals for the same purpose, more than 60pc above the year-earlier period, stock exchange data showed yesterday.
HSBC holds a 40pc stake in SABB.
During the first quarter, Riyad booked loan provisions worth 194m riyals while SABB's stood at 176.5m riyals.
Riyad saw its net profit fall 16.5pc in the second-quarter while SABB's fell 34pc.
Saudi lenders had a difficult year in 2009 with profitability eroded by a doubling of provisions for non-performing loans to almost 11 billion riyals as a rising number of Saudi and regional firms ran into financial problems.
Several Saudi banks continued to see lower profits during the first half as credit growth struggled to recover after a lending spree over the 2004-2008 period that was buoyed by a surge in oil receipts.
The growth of Saudi bank credit, especially to the private sector, was flat throughout much of last year due to the global slump and after defaults by local family firms.