10.02 AM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Three Saudi banks' Q1 profits fall on lending

Saudi banks' loan growth will take a little more time to recover, say analysts. (AFP)

Published
By Staff Writer

Three more Saudi Arabian banks announced a fall in first quarter profits yesterday, hit by drop in lending income.

Samba made a net profit of SR1.21 billion (Dh1.18bn, $322.7 million) in the three months to end-March, down 4.8 per cent from SR1.27bn a year earlier.

Samba Financial Group's profits were in line with analysts forecasts after Saudi Arabia's second-biggest lender by market value made less money on loans. Analysts were expecting Samba to make an average SR1.08n in net profit during the period.

Like the majority of listed Saudi lenders, Samba said its net lending income fell during the first quarter by 10.5 per cent to SR1.17bn. But unlike the majority, Samba also saw a 1.5 per cent decline in income from non-lending operations which include brokerage and foreign exchange transactions.

Saudi Investment Bank reported a 91 per cent decline in first quarter profit to SR21m from SR241m in the year-earlier period, according to the bank's statement on the Saudi bourse website yesterday.

Banque Saudi Fransi, in which French Calyon holds a 31.1 per cent stake, made a net profit of SR714m in the three months to end March, down from SR741m a year earlier. The earnings came close to the highest of forecasts by three analysts in a Reuters survey this month.

The bank's operating income inched down 0.6 per cent to SR1.07bn after lending income slid 5.7 per cent to SR723m. The loans portfolio fell 1.2 per cent to SR80bn while deposits fell 4.3 per cent to SR88bn.

Profits at most Saudi banks came under pressure in 2009 from provisions to counter exposure to some troubled Saudi firms and also from flat credit growth as lenders restricted loans during the global slowdown.

The slowdown in lending income – as shown by first quarter earnings – indicated that most banks remain cautious until the global financial system strengthens its recovery, said Hesham Abu Jamea of Bakheet Investment Group.

Fransi raised net income from non-lending operations by 12.2 per cent in the first-quarter to SR349m, according to Reuters calculations, but operating costs rose 6.3 per cent in the same quarter to SR358m. Fransi did not disclose the amount of first quarter provisions – which include non-performing loans and investments.

Fransi was among banks that best covered with provisions their non-performing loans, which surged in 2009. It raised provisions by 51 per cent to SR1.28bn in 2009 to cover bad loans which rose 32.2 per cent to SR1.01bn.

Earnings per share fell to SR0.99 in the first quarter from SR1.02 a year earlier. "Loan growth is going to take a little time to recover, and it isn't something you will see bouncing back very sharply," said Murad Ansari, a Riyadh-based equity analyst at EFG Hermes.

"The major part of loan growth will probably come through in the second half this year. Banks are more cautious to lend, and the process to get a loan is longer," he said.

Banque Saudi Fransi increased provisions more than seven-fold against bad loans in the fourth quarter to SR418.1m from SR57.6m in the previous quarter.