Riyadh- Interests imposed on funding operations, which have increased lately, became one of the factors expected to contribute in maintaining the Saudi banks’ profitability in the upcoming period. This indicates that banks might achieve during the second half of 2016 equal profits compared to the first half of the same year, USD6.2 billion (SAR23.3 billion).
Banking sources told Asharq al-Awsat that interests on funding operations increased remarkably during the second quarter of 2016. “The increase rate cannot be determined because it varies from one bank to another, but in general it is higher than 2015,” added the sources.
Saudi banks’ net profits increased 0.75% in the first half of 2016 while other sectors’ profits dropped 7.5%. This means that the Saudi banking sector still possesses strong investment and financial mechanisms.
On another level, Saudi Electricity Co. (SEC) has signed a SAR5 billion (USD1.33 billion) murabaha-structured Islamic financing with a number of local banks to help support its projects.
Ziad bin Mohammed Al-Shiha, chief executive officer of SEC, said that the financing agreement extends to seven years and it reflects the strong credit report of the company. “This financing is part of the SEC strategy to implement diverse electricity projects that aim at meeting the increasing demand of electricity in Saudi Arabia,” added Shiha.
Capital Market Authority (CMA) announced earlier that, in cooperation with the Ministry of Commerce and Investment, joint stock companies whose losses exceeded half the capital were granted one year period to fix their condition before being liquefied.
CMA also called on shareholders of enlisted companies (of losses more than 50% of the capital), members and heads of boards of directors to exploit this duration to correct the companies’ condition in a way that adheres to terms of article 150 of the new amended law of companies.