MARRAKESH, Morocco: The chief executive of Saudi Arabia's largest bank said he expects to see collective provisions at local lenders increase in the coming quarters, but enough specific provisions have been set aside for bad loans from troubled family groups Saad and Al-Ghosaibi Bros & Co. “We notice in the third quarter, and I expect to see in the future, an increase in provisions but not specific ones - general,” Abdullah Al Rajhi, of Al Rajhi Bank, said at the World Economic Forum for the Middle East and North Africa in Morocco. “Banks have already covered the specific, any more provisions will go to the general provisions,” Al Rajhi said. Saudi banks have already set aside enough provisions for their exposure to Saad and Al-Ghosaibi and he said the state of the banking sector was “very reassuring.” Provisions for bad loans have eaten into the earnings of Saudi Arabia's banks, partly due to loan troubles at Saad and Al-Ghosaibi. Al Rajhi Bank reported a third-quarter net profit of SR1.64 billion ($437.4 million), an 8.6 percent drop on year. Al Rajhi said he expects banks in the Kingdom to grow their loan books next year. “I expect there will be growth in the banking sector in general,” he said. The lender will open up a branch in Kuwait by the end of the year, and has plans for more than one branch in Jordan next year, Al Rajhi said. “We have a license for one bank in Kuwait,” he said. “We have one [in Jordan], and we will hopefully have more than one next year.” The bank, which already has a wholly-owned subsidiary in Malaysia, re-evaluates that market every year, but there are no specific plans to expand there at the moment, Al Rajhi added. Meanwhile, there are great opportunities to invest in the Gulf and tap into the growth of the Middle East and North Africa (MENA) region, Sheikh Mohammed bin Essa Al Khalifa, chief executive of the Bahrain Economic Development Board (EDB), told CNBC Wednesday. In an interview from the World Economic Forum (WEF) on the Middle East and North Africa in Marrakech, Morocco, Sheikh Mohammed told the global broadcaster that the demographics of the region represent significant potential for international companies. He was joined on air by Rasheed Al Maraj, governor of the Central Bank of Bahrain (CBB). “We are a growing region. Today we are approximately a trillion dollars in GDP and the EIU forecasts this will grow to two trillion dollars. So today we are roughly the size of India. People talk about China and India; our goal is to say ‘don't forget about the Gulf.' And within the Gulf, Bahrain offers the best value proposition.” “We have the rule of law, the strength of regulation, and one of the freest economies in the Gulf for business,” Sheikh Mohammed said. Bahrain is ranked the 13th freest economy in the world and the most free in MENA in the latest Index of Economic Freedom, published each year by the Heritage Foundation and Wall Street Journal. It is one of many international indices to reflect a commitment in Bahrain to creating the optimum business environment in line with the Kingdom's Vision 2030, designed to drive the private sector as an engine of growth and support further diversification of the economy. Bahrain is now two years into the process. Rasheed Al Maraj added that Bahrain has made tremendous efforts in order to improve the regulatory framework of the country. The CBB itself is the only single regulator in the Middle East and widely considered the best and most progressive in the region. “There have been serious efforts in bringing reform - both economic and political,” he said. “As far as banking regulation, we have modeled our framework into the international regulatory framework.”
