SABB has strong liquidity position, cost of risk lower than expected: CEO

Tony Cripps, Saudi British Bank's (SABB) CEO

Saudi British Bank's (SABB) liquidity position is very strong, and the loan-to-deposit ratio is in the mid-70s, said CEO Tony Cripps.

In a statement to Al-Arabiya TV channel, he said that the Saudi banking sector is not facing any liquidity-related issues, adding that the Saudi Central Bank (SAMA) provided liquidity to all banks, some of which received deposits while others did not.

The CEO also explained that SABB did not have to benefit from this liquidity. Instead, the bank resorted to regular facilities such as the repo market, in addition to a mix of financing mechanisms.

Moreover, SABB's cost of risk is lower than expected. The bank has one of the most positively-sensitive budgets towards interest-rate hikes, which was reflected in analysts' expectations. The bank benefited from them in terms of growing its profit margins, according to the top executive.

In addition, Cripps highlighted that forecast for tight liquidity conditions led to the trading of Saudi Arabian Interbank Offered Rate (SAIBOR) rates above the USD LIBOR levels. But after SAMA pumped liquidity, SAIBOR became at much lower levels than US rates.

He pointed out that the risk costs disclosed by the bank are lower than most expectations, reaching 17 basis points (bps) against guidance that the risk costs for the whole year would range between 30-60 bps.

The risks are low, according to the CEO, with no structural issues resulting from the rising interest rates, as demand for loans is still strong. This was evident in the bank's results, which showed a solid demand for borrowing by institutions and individuals.

Cripps also stated that profit margins are currently growing, the outlook is positive, competition in the banking sector is ongoing and nothing has changed.