Two more Saudi banks – Al Rajhi Bank and Bank Al Jazira – yesterday announced decline in profits due to rise in provisions.
Al Rajhi Bank, the Gulf region's largest Islamic bank by market value, yesterday said first-quarter net profit fell 2.8 per cent, below analysts' forecasts, as provisions continue to weigh.
The Islamic bank posted a net profit of SR1.68 billion (Dh1.64bn) in the three months to end March 31, down from SR1.732bn in the year-earlier period.
The bank cited its conservative policy for taking provisions as a reason for the decline, without providing further details.
Profits at most Saudi banks came under pressure in 2009 as a result of provisions against troubled Saudi firms, and first-quarter earnings were pulled down by a slowdown in lending activity. Al Rajhi's loan portfolio, however, rose by six per cent to SR117bn while deposits increased eight per cent to SR129bn. The average earnings forecast for Al Rajhi was SR1.75bn in a Reuters survey.
The bank in the fourth quarter of 2009 booked SR513.9 million in provisions against loan losses.
Al Rajhi's operating income reached SR2.8bn, up 3.37 per cent from the previous year, and lending income rose 9.82 per cent to SR2.2bn.
Saudi Arabia's Bank Al Jazira posted an 87 per cent decline in first-quarter net profits, missing analyst forecasts as it booked unspecified provisions.
The bank posted a net profit of SR13m in the three months ended March 31, compared to SR102m in the same period a year earlier.
Two analysts surveyed by Reuters expected net profits between SR54m and SR72m. "The decline in net profits is due to the bank's conservative policy in taking provisions," the bank said in a bourse statement, without giving further details.
The bank's operating income increased 10 per cent to SR305m, while lending income fell three per cent to SR168m in the quarter.
Deposits reached SR19.2bn at the end of March, down 10 per cent from the previous year.