Magazine article Global Finance

Samba. after Merger, Posts Record Profits

Magazine article Global Finance

Samba. after Merger, Posts Record Profits

Article excerpt

Saudi American Bank has consolidated its leadership in the Saudi financial-services market following a merger that has made it the third-largest bank in the Middle East.

Saudi American Bank (Samba) celebrated its 20th anniversary in 2000 by consolidating its dominant role in Saudi Arabia's financial system, with record profits and improved results in all key operating criteria.

Samba's growth is occurring within the context of solid expansion of the Saudi economy, driven by the highest inflow of oil revenue to the country since the peak of the oil boom in 1981.

According to Samba's chairman, Sheikh Abdulaziz Bin Hamad Algosaibi, profits rose 6%, to 1.5 billion rivals, during the first nine months of 2000. This represents an impressive 22.2% return on equity. "In the third quarter of 2000 alone our profits were 518 million rivals," Algosaibi says."That was a 3% increase over the second quarter, giving two consecutive quarters with earnings in excess of 500 million rivals. This is unprecedented for a Saudi bank."

These results have been achieved following the $5.5 billion merger of Samba with United Saudi Bank (USB).The deal, approved in 1999, made Samba the third-largest financial institution in the Middle East.

"Revenue synergies from the merger with USB are beginning to show through," says Algosaibi. Progressive growth throughout the year led to a 7% increase in revenue during the third quarter of 2000, compared with the same period in 1999. The merger with USB also has brought efficiency benefits, with operating expenses declining 3.4% through the first nine months of 2000. …

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