Saudi's Al-Rajhi profit tops forecasts

SOLID PERFORMANCE: Al-Rajhi has posted its best results since 2006.

Al-Rajhi Bank, the largest Gulf Arab bank by market value, on Tuesday posted second quarter profit near the top end of analysts' forecasts on higher income from its core activities.

The Islamic Saudi lender made a net profit of 1.74 billion riyals ($464.5 million) in the three months ending June 30, 2007, up 8.2 percent from the 1.61 billion riyals it made in the year-earlier period, it said in a statement on the Saudi bourse's website.

Analysts' forecasts for Al-Rajhi's second-quarter profit ranged from 1.61 billion riyals to 1.75 billion riyals in a Reuters survey last month.

It was the strongest rise quarterly net profit since December 2006, after which the bank had a run of negative results on the back of a 2006 regional stock market crash which slashed banks' brokerage and fund management revenue.

Al-Rajhi's net investment income - the equivalent of net income from lending in traditional banking - rose 12 percent in the second quarter to 2.14 billion riyals.

Banking services income rose 44 percent to 577 million riyals, it said, without giving details about other sources of revenue such as from trading and foreign exchange operations.

Earnings per share at the end of the first six months of this year reached 2.23 riyals up from 2.12 riyals a year earlier, it added

The bank raised its paid-up capital by 11.1 percent earlier this year through a bonus share issue.

"The bank has continued to develop its investment and banking resources," Chief Executive Abdullah Sulaiman Al-Rajhi said in the statement.

Hisham Abu Jamea, head of asset management at Bakheet Financial Services, said Al-Rajhi, like other Saudi peers, has been boosting lending in an environment marked by low interest rates and excessive liquidity from record oil receipts.

"The second-quarter earnings set Al-Rajhi on course to end 2008 with an 8 percent rise in in its net profit over the previous year," Abu Jamea said.

Banks in the world's largest oil exporter have moved away from relying on income related to stock market activities since the 2006 crash. The Saudi bourse is the Gulf region's worst performer this year.

Shares of Al-Rajhi are down more than 26 percent this year, in line with the banking and financial benchmark index and above the 15.8 percent year-to-date underperformance of the main stock index.

Al-Rajhi said net operating income in the six months to June 30 rose 15.2 percent to 5.2 billion riyals and net profit for the same period rose 5.2 percent to 3.34 billion riyals. (Reuters)

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