SABB bank <1060.SE>, HSBC's Saudi affiliate, booked 351.5 million riyal ($93.7 million) in provisions for loan losses during the third quarter, bourse data showed on Saturday.

SABB reported a worse-than-expected 19.8 percent drop in third-quarter net profit, hit by an increase in provisions for bad loans.

The data also showed that Aljazira Bank <1020.SE> made provisions for loan losses of 115.7 million riyals during the third quarter, the lender's highest in at least one year, while Saudi Investment Bank (SAIB) <1030.SE> booked 60 million riyals for the same purpose, its the highest this year.

Aljazira reported a 14 percent increase in third-quarter net profit [ID:nLE169399] while SAIB tripled its net profit during the same period.

The provisions have been widely expected amid concerns over the solvency levels of heavily indebted Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi & Bros (AHAB).

Unlike their peers in the Gulf Arab region, Saudi banks have not disclosed the level of their exposure to these two firms and this keeps analysts wondering whether any newly booked sums would be high enough to fully cushion them against anticipated losses.

A Saudi government panel has brokered a deal between Saad Group and Saudi lenders but neither party disclosed the details of the agreement.

Saudi central bank governor Muhammad al-Jasser said last week that Saudi banks would make sure they have enough provisions for doubtful debts. Jasser has once in the past encouraged Saudi banks to keep the level of their exposure to the two groups secret.

Saad and AHAB are at the center of an estimated $22 billion debt implosion. The two firms are battling in court over alleged financial irregularities in the wake of a debt restructuring.

Standard & Poor's has said it found banks in Saudi Arabia and the United Arab Emirates accounted for almost two-thirds of the total net exposure to the conglomerates of the 30 commercial banks it rates in the Gulf.

(Reporting by Souhail Karam; Editing by Sugita Katyal)

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