Impact of Non-Performing Loans on Saudi Bank Profitability
Mahmoud M. Al Zyood

Dr. Mahmoud M. Al Zyood, Department of Finance, College of Business, King Abdulaziz University, Jeddah, Saudi Arabia.

Manuscript received on 25 July 2022 | Revised Manuscript received on 07 August 2022 | Manuscript Accepted on 15 November 2022 | Manuscript published on 30 November 2022 | PP: 21-24 | Volume-2 Issue-2, November 2022 | Retrieval: 100.1/ijef.D2521111422 | DOI: 10.54105/ijef.D2521.111422 

Open Access | Ethics and Policies | Cite | Mendeley | Indexing and Abstracting
© The Authors. Published by Lattice Science Publication (LSP). This is an open-access article under the CC-BY-NC-ND license (

Abstract: Non-performing loans (NPLs) have become increasingly worrying to the Saudi banking sector. Sanctioned loans have a repayment schedule, including principal and interest amounts. Excessive defaults on loans leads to a liquidity crisis throughout the banking sector, and can even cause bank failure. As a result, banks have to cover non-performing loans and maintain reserves under the instructions of the Saudi Arabia Central Bank, which severely affects profitability. This study analyzes the comparative position of non-performing loans in the Saudi banking sector over the period 2009-2017 to determine causes and impacts on bank profitability, using data from annual reports. The study variables are profitability (ROA and ROE) as the dependent variable, and non-performing loans ratio (NPLR) as the independent variable. The data was analyzed by correlation, regression, and analysis of variance (ANOVA) using SPSS. The empirical results represent that NBLR has a negative influence on the dependent variable. 

Keywords: NBLR, non-performing loans (NPLs), ROA, ROE.
Scope of the Article: Banking