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Saudi GDP to Grow 5.1%

Middle East : 20 November 2011

Source: Arab News

Saudi Arabia’s gross domestic product is expected to grow by 5.1 percent in 2012 despite the unpredictable economic situation of advanced countries, according to a report published by Riyad Capital.

“As a result of a wide variety of trading partners to which Saudi Arabia exports its products, it will have a foreign currency reserve valuing SR2 trillion,” the report said.

Speaking about the credit situation of banks, the report said: “Bank budgets have improved considerably after the passage of six quarters from the period for getting rid of high-risk assets.”

The fall in interest rates caused some problems to the banking sector in general. However, the banks tried to increase their revenue by revising their lending portfolios, the report pointed out.

Riyad Capital said the increase in personal banking would help banks to achieve a balance between risks and revenues. It said a fall in the issuance of government bonds posed a challenge to the country’s banking system.

“The European debt crisis will limit investment options and force banks to follow a conservative policy that it followed in the past,” the report said.

Referring to its coverage of Saudi Hollandi Bank shares, Riyad Capital advised clients to purchase them at the target rate of SR34 during 12 months, representing 10.1 repeated profitability, 1.4 repeated book value, explaining its predictions for 2012.

The report showed that the bank targets on expanding its retail sector and focus on its distinguished clients by extending the best possible services to them.

Riyad Capital predicts that the profitability of the bank’s shares would reach SR3.35 in 2012 with a growth rate of 9 percent compared to the previous year.

About Saudi Investment Bank shares, the report said its target rate would reach SR18.50 during 12 months, representing 12 repeated profitability and 1 repeated book value in 2012. It said the bank’s foreign investment accounted for 40 percent of the total. The bank’s net revenue is expected to increase by 18 percent in 2013, it added.

Referring to Bank AlJazira shares, the report said its target rate would reach SR19.50 during 12 months, representing 13.6 repeated profitability and 1.1 repeated book value in 2012. The bank’s net revenue is expected to grow by 868 percent by the end of 2011 compared to the previous year because of a fall in allocations. The bank is expected to maintain a growth rate of 56 percent and 43 percent in the coming two years.

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