Saudi banks booked more provisions for bad loans during the third quarter but a veil of secrecy over the level of their exposure to troubled private firms is keeping investors guessing over their adequacy. Stock exchange data showed that five Saudi banks booked more provisions for loan losses in the quarter, raising by at least 183 percent their total amount this year compared to the first nine months of 2008. The provisions had been widely expected amid concerns over the solvency levels of heavily indebted conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros (AHAB) which are at the centre of an estimated $22 billion debt implosion. Unlike peers in the Gulf Cooperation Council states, Saudi banks have not disclosed the level of their exposure to these two firms and this keeps analysts wondering whether any newly booked provisions would be high enough to fully cushion them against anticipated losses. “We don't have a clear idea about exposure ... if you don't know the level of exposure, then it will be difficult to say if these provisions are enough,” said Ibrahim Al-Alwan, deputy chief executive of KSB Capital. Standard & Poor's said banks in Saudi Arabia and the United Arab Emirates account for almost two-thirds of the total net exposure to the conglomerates of the 30 commercial banks it rates in the Gulf. A Saudi government panel last month brokered a deal between Saad Group and Saudi lenders but neither party disclosed the details of the agreement adding further mystery to its significance for holders of Saudi banking shares. “Officials say banks are well-covered,” KSB's Alwan said. “Banks here are generally conservative when it comes to lending and provisions but they are not transparent enough.” SABB, HSBC's Saudi affiliate, booked SR351.5 million ($93.7 million) in provisions for loan losses during the third quarter, bourse data showed on Saturday. SABB reported a worse-than-expected 19.8 percent drop in third-quarter net profit, hit by an increase in provisions for bad loans. This brings to SR782.2 million its total provisions made over the nine months to end-September. The data also showed that Aljazira Bank made provisions for loan losses of SR115.7 million during the third quarter, the lender's highest in at least one year, while Saudi Investment Bank (SAIB) booked SR60 million for the same purpose, its the highest this year. In comparison, Riyad Bank has put aside SR601.8 million in the same period. Aljazira reported a 14 percent increase in third-quarter net profit while SAIB tripled its net profit during the same period. Samba Financial Group, Saudi Arabia's second-biggest lender by market value, booked SR76.9 million ($20.5 million) in loan provisions in the third quarter, bourse data showed on Saturday. The provisions were the lowest in at least one year. The lender booked SR97.3 million for loan losses in the second quarter and SR33.2 million in the third-quarter of 2008. The lender has posted a 0.7 percent rise in third-quarter net profit. Banque Saudi Fransi, the Saudi affiliate of French Calyon, booked SR57.6 million ($14.6 million) in provisions for loan losses during the third quarter, bourse data showed on Saturday. Fransi booked loan loss provisions worth SR119.9 million in the second quarter of this year. The bank has posted a 1.9 percent decrease in third
