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RIYADH, July 13: Al-Rajhi Banking and Investment Corp. (ARABIC), one of the fastest expanding banking units in Saudi Arabia, said on Saturday its profits in the first six months of 2002 dropped 31.3 per cent.
ARABIC posted net profits of $163 million to June 30 this year, compared to $237.4 million in the same period last year, the bank said in a statement.
But total assets increased 8.5 per cent from $14 billion on June 30, 2001 to $15.2 billion at the end of June this year.
General Manager Abdullah al-Rajhi attributed the drop in profits to a sharp decline in returns on foreign investments. But Rajhi said ARABIC had strong reserves sufficient to counter any unfavorable results.
The bank however reported a slight increase of five per cent in second quarter profits over those of the first.
ARABIC has 378 branches and 742 ATMs in Saudi Arabia, making it the largest banking network in the kingdom.
BUDGET: Saudi Arabia, which has projected a $12 billion budget deficit for 2002, is expected to boast a small surplus on the back of high oil prices and strong private sector growth, a report forecast here Saturday.
Our forecast is based on the assumption that oil prices will average 22 dollars (per barrel) for Saudi crude this year, compared to a price of $16-17 that was assumed in the Saudi budget, Riyad Bank said in its second quarter report.
As a result, revenues from oil, projected at around $30 billion, were upgraded to around $40 billion, with the possibility of a further increase as both output quota and price are expected to rise.
The report estimated that the kingdom generated over $19 billion in oil revenue, about two-thirds of budget projections, by the end of the first half of 2002.
Finance Minister Ibrahim al-Assaf said last week that Saudi Arabia, the world’s largest oil exporter, had generated more-than-expected revenue in the first six months due to higher oil prices.
Riyad Bank also upgraded its forecast for other Saudi economic indicators, replacing a 2.2 per cent decline in Gross Domestic Product (GDP) to a positive real growth by the end of the year.
Saudi Arabia’s Opec output quota currently stands at 7.053 million bpd, but local reports have indicated the kingdom is actually producing 7.4 million bpd. About one million bpd is used for local consumption.—AFP
