Kingdom's banks look to golden era (page 2 of 2)

We are particularly pleased with our continued strong performance in the corporate banking sector."

The Kingdom's smallest bank Bank Al-Jazira also saw its profits rise 278% to SR254.3 million compared to SR67.3 million in the first half of last year Customer deposits went up 41% in the period to reach SR 9.9 billion. CEO Mishari Al-Mishari attributes the results to the success of a strategic modernisation and the bank's development of Sharia-based financial instruments.

The immediate future looks upbeat for the whole sector Saudi banks continue to trim costs with cost to income ratio dropping to 35.8% in the first quarter of 2005 compared to 41% the year before.

Banks also expect to see an increasing amount of income generated from companies seeking listings and through initial public offerings. They also continue to benefit from their status as soul agents for trading in the local capital market and providing management services.

A young and growing population combined with an expanding economy is likely to mean a continuing expansion of banks' loan portfolios helping to increase margins and income levels.

NCB believes that the Kingdom's SR 500 billion of mega-projects over the next five years will also offer the banking sector ample opportunities in structured finance and syndication areas.

However, with very large capital projects, Saudi banks will need to develop co-operation with international institutions to provide the necessary financing instruments and arrangements. In this, a growing local aptitude in Islamic financing could prove a valuable element.