Saudi banks started 2012 on strong footing as they earned nearly SR6.7 billion in the first two months of 2012 on the back of firm economic and lending recovery, the Saudi Arabian Monetary Agency (SAMA) said Monday. The Kingdom's 12 commercial banks earned around SR3.46 billion in January and SR3.28 billion in February. The high earnings were a result of a surge in domestic credit as banks are slowing down their bad debt provision build up and taking advantage of an upswing in the economy and in public sector projects. Banks' claims on the private surged by 10.7 percent to SR858.3 billion at the end of 2011 and continued to grow to reach SR884 billion at the end of February 2012. Their foreign assets also swelled from SR193.1 billion at the end of 2010 to SR208.7 billion at the end of 2011 and SR219.5 billion at the end of February. The banks' profits in 2011 were 18 percent above the 2010 income and marked a return to profit growth by the banking sector. “There are two main reasons for the rise in the banks' profits last year… first, provisions for bad debt were much lower than in the previous few years and second, lending grew at the fastest pace since 2008,” said Paul Gamble, head of research at the Riyadh-based Jadwa Investments. The surge in credit followed a sharp slowdown in previous years.
