Saudi banks’ NPLs ratio stood at 1.1% in Q2: Aljazira Capital

Saudi Arabian banks non-performing loans ratio in the second quarter of this year reached 1.09 percent compared with 1.10 percent in the same period last year, while the NPL coverage ratio declined to 178 percent, against 180 percent in Q2-2015, according to a research note by Aljazira Capital.

Alinma and Arab National Bank performed the best in the industry, with NPLs ratios of 0.67 percent and 0.75 percent, respectively. Their NPL coverage stood at 175 percent and 288 percent, respectively, in the second quarter of 2016.

But, Alinma posted a drop in NPL coverage from 209 percent in the second quarter of 2015 to 175 percent in the same period 2016.

Al Rajhi Bank and National Commercial Bank (NCB) had the highest NPL ratio of 1.43 percent 1.42 percent.

“Alrajhi’s NPL coverage ratio stood at 195 percent, whereas NCB’s NPLs coverage stood at 145 percent, in Q2-2016,” Aljazira Capital said.

Arab National achieved the greatest improvement in NPL coverage from 217 percent in Q2-2015 to 288 percent in Q2-2016.

The industry’s Advances to Deposit Ratio (ADR) improved to 88.4 percent in Q2-2016 from 79.8 percent in Q2-2015, partly led by a 2.4 percent year-on-year (YoY) decline in deposits and 8.1 percent YoY increase in loans.

Riyad Bank posted the highest ADR of 95.6 percent, while Samba reported the lowest ADR of 77.2 percent in Q2-2016, compared with 78.2 percent in Q2-2015.

The Saudi Arabian Monetary Agency (SAMA), the kingdom’s central bank, increased the regulatory ADR limit from 85 percent to 90 percent.