Samba profit slump continues

SLUMP CONTINUES: Samba posted its second straight quarterly profit decline in the second quarter. (Getty Images)

Samba Financial Group, Saudi Arabia's second-biggest publicly traded bank, posted its second straight quarterly profit decline, missing all analysts' forecasts, weighed by a drop in brokerage income.

Profit fell 5.7 percent to 1.22 billion riyals ($326.4 million) in the three months to June 30, compared with 1.298 billion riyals in the year-earlier period, Samba said in a statement on the bourse website.

"[The fall] was due to a decline in income from financial brokerage," Chief Executive Eisa Al-Eisa said in the statement.

Samba's first-quarter profit had fallen 5.4 percent, also due to lower bourse-related revenues.

The second-quarter profit missed all six forecasts of analysts in a net profit survey by newswire Reuters last month ranging from 1.25 billion riyals to 1.45 billion riyals.

"The size of basic banking operations in the first half grew notably as illustrated in the rise in net special commissions to 2.51 billion riyals, a rise of 6.6 percent," Al-Eisa said.

The economy of top oil exporter Saudi Arabia is surging on a more than six-fold rise in oil prices since 2002, which is driving investments in industrial projects, infrastructure and property, and giving local banks many financing opportunities.

But as inflation soars, the central bank has tightened bank lending curbs three times since November to rein in credit growth.

Saudi Arabia's benchmark is the Gulf Arab region's worst performer this year, down 17.8 percent. Many Saudi banks whose profits had soared during a stock market rally in 2005 took a hit during a regional crash the following year.

The pipeline of initial public offerings has picked up this year. A subsidiary of Samba, Samba Capital, was lead manager of Saudi Arabian Mining Co's (Maaden) 9.25 billion riyal initial public offering this month.

Samba's first-half earnings per share fell to 2.69 riyals from 2.85 riyals, Samba said.

Assets rose to 184 billion riyals at the end of the first half compared with 129 billion in the corresponding period 2007. Deposits surged to 122 billion riyals from 98 billion in the same period.

Shares of Samba, down more than 34 percent this year, closed at 79 riyals on Saturday, a 54 percent discount to EFG-Hermes' 122-riyal target price for the stock. (Reuters)

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