The Saudi banking sector is among the most profitable and efficient in the region, according to a report.

The banking sector in Saudi Arabia is in the midst of a structural upturn, revealed EFG-Hermes, the leading investment bank in the Middle East and North Africa (MENA) region, in its comprehensive research report.

Low penetration and high profitability are two factors that characterise the prospects of the Saudi banking sector, it added.

Despite share prices of Saudi bank’s having been on a roller coaster ride since the middle of 2007 through to January 2008, sentiment has turned around, seeing the banking sector index surge by 10pc since the middle of April (although year-to-date performance is still –21 per cent, and is 24pc below the high reached in January 2008), the report, authored by Murad Ansari, said.

Valuations for Saudi banks are not particularly cheap, in fact they trade at the higher end of the range on both current year P/Es and P/Bs, it added.

The report, entitled “Best of Both Worlds!,” provides an in-depth analysis of Saudi Arabia’s banking sector, which is the second largest in the GCC region by asset size, currently estimated at $290 billion, the company said in a statement.

The 56 page report includes a detailed look at the macroeconomic backdrop, sector and profitability outlooks, recent results and valuation, it added. – TradeArabia News Service