Cautious optimism is the word of the day in the Saudi banking sector as the gains of mid-decade failed to recur in the wake of a bearish first quarter 2006 at the Riyadh-based Tadawul (stock exchange). The remarkable fall in brokerage and asset management fees, which had seen record profitability over the previous three years, proved a serious concern for the industry. A Fitch Ratings report based on an analysis of ten major commercial banks in Saudi Arabia suggests that on average the banks recorded a year on year decline in profit, the first in recent years. New regulatory curbs on lending, and the global credit crunch resulting from the US subprime crisis fallout, also had negative impacts on the sector. Competition from new entrants to the industry proved another challenge for Saudi banks. According to Zawya Dow Jones, there are now six foreign banking institutions in the kingdom and
