A burst of investment by Saudi Arabia's government, announced in March to dampen political tensions, leads to soaring profits at the kingdom's lenders.
Saudi cash lifts bank profits
Profits at Saudi banks soared during the third quarter as a burst of government spending started to filter through to local lenders.
But the bright picture for the kingdom's banking sector stands in contrast to the gloom facing financial institutions elsewhere in the world, with US and European banks facing sluggish economic growth and bad debts also expected to rise among Chinese lenders.
For banks, the Saudi government's spending package provides a substantial boost, wrote Naresh Bilandani, an analyst at JPMorgan, in a research note.
"The kingdom, in light of the Arab Spring, announced a sizeable government spending programme, amounting to approximately 470bn Saudi riyals [Dh460.3bn] … this is approximately equal to 29 per cent of Saudi's 2010 annual GDP," he wrote. "In our view, these new investments are among the key drivers of future lending growth."
National Commercial Bank, the kingdom's biggest bank by assets, reported a 86.7 per cent increase in profits for the third quarter to 1.54bn riyals.
Al Rajhi Bank, the biggest listed lender, reported a 19.6 per cent rise in profits to 1.93bn riyals.
Bank Saudi Hollandi's profits more than tripled to 299.4 million riyals, while Alinma Bank's profits of 122m riyals were more than six times higher than in the same period last year.
Saudi banks were also well insulated from the sovereign-debt crisis embroiling the euro zone, Mr Bilandani said.
"We expect limited impact on Saudi banks from the global slowdown," with the banking sector's exposure to Europe accounting for only 2 per cent of lenders' assets, he said.
However, the faltering global economy could spell trouble for Saudi lenders if oil demand falls and the kingdom is forced to cut spending, analysts from BankMuscat wrote in a research note.