...Owing to a more difficult international and domestic operating environment, leading to lower oil prices and asset valuations, the Saudi banking system's performance distinctly weakened in the second half of 2008, particularly in Q408. All Saudi banks, however, still managed to be profitable in 2008. Performance ratios, despite the downward trend, compared well regionally and internationally with an average operating ROAE of 17.3% (2007: 22.4%) and an average operating ROAA of 2.1% (2007: 3.1%) in 2008. Fitch Ratings expects 2009 to be a challenging year for the Saudi banking system. The agency believes lower business volumes and additional loan impairment charges will pressure profitability. Moreover, lower asset valuations and impairments on financial assets (if markets do not improve) will also continue to negatively affect the banks' performance, to varying degrees. Strong demand for credit, particularly in the corporate sector (albeit lower than in recent years), however, should continue...
